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Many are wondering if Tesla Inc (NASDAQ:TSLA) can no longer escape admitting it entered into its flop era. Tesla CEO did warn a year of slower growth is ahead and the way 2024 began, that was only the tip of the iceberg when it comes to hardships faced by the EV pioneer. However, although Tesla reported a major sales decline, its biggest sales since 2012, the EV king showed it is not going down without a fight as it announced it will be accelerating the production of its next stage, affordable, EVs. Upon the news, shares surged almost 10% after-hours, as this was the glimmer of hope that Tesla desperately needed as for the first time ever is being threatened by competitors, like its Chinese rival, BYD Company Limited (OTC:BYD).
BYD did more than deepen the price war with more affordable EVs. Known as the Tesla killer, BYD is going after Tesla on all fronts. This week, BYD even unveiled the name of its electric pickup that will challenge Tesla’s Cybertruck. On Monday, BYD revealed that its electric shark will be named BYD Shark, featuring a plug-in hybrid system that promises to improve off-road driving experiences.
Tesla’s first quarter financials came below estimates due to numerous challenges.
For the quarter ended on March 31st, Tesla reported revenue declined 9% YoY% to $21.30 billion, coming short of $22.15 billion that LSEG expected. Automotive revenue alone contracted 13% YoY to $17.38 billion.
But, with falling demand, net income tanked 55% YoY to $1.13 billion, or 34 cents a share as gross profits plummeted 18%, partly due to price cuts. Adjusted earnings amounted to 45 cents per share, also coming short of LSEG’s estimate of 51 cents.
Tesla’s next chapter is about building an affordable EV.
Previously announced for the second half of 2025, Tesla stated on Tuesday it plans to kick off the production of affordable EV models early next year, if not late this year. Musk also announced the reveal of Tesla’s robotaxi on August 8th and also touted the company’s nvestments in AI infrastructure. But, Tesla has has been promising a self-driving vehicle for years and still hasn’t delivered on Musk’s promise.
Tesla is betting its turnaround on affordable EVs.
EV sales growth is slowing down, that is a fact due to which Tesla and key rivals have been slashing EV prices in attempt to fuel demand. But, the latest quarter shows Tesla is now paying the price of the price war it ignited while demand continues to be weak. In response, Tesla got affordable EVs back on the menu and the market was glad to hear it. But, one can only hope that that they will be enough to make Tesla's comeback happen.
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