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• Tesla unveiled its first-quarter earnings on Tuesday after market close.
• Revenue declined by 9% to the low of $21.3B.
• The EV firm has been under pressure following its plans to pivot from cheaper models.

Tesla (TSLA) reported its Q1 earnings on Tuesday after the bell. The report reveals various financial challenges, with declined profitability.

Its earnings per share came at $0.45, lower than analyst estimates of $0.51. Also, the EV marker’s revenue declined by 9% to $21.3 billion, missing the consensus expectations of $22.3 billion.

Tesla has seen deteriorated profitability, with CEO Elon Musk pressured to better articulate the company’s future goals.

Also, the first quarter witnessed operational obstacles, including the Fremont factory’s switching to a new production design, Giga Berlin’s arson attack, and the effect of the Red Sea war.

Moreover, Giga Shanghai recorded deteriorated output because of Chinese New Year shutdowns.

The latest colossal layoff rounds confirm a deteriorating long-term growth for Tesla.

Tesla earnings snapshot

• Total revenues dipped 9% YoY to $21.3B
• Earnings per share of $0.45
• Net income down 55% YoY to $1.1B
• Free cashflow of negative $2.5B
• Total vehicle productions dipped 2% over the past year.

The EV manufacturer has experienced a rollercoaster ride in 2024 amid plans to prioritize robotaxis (where it is facing intense competition from China) and autonomous driving, pivoting from making cheaper models.

Meanwhile, free cash flow came at -$2.5 billion, potentially due to Tesla’s $1 billion expenditure on artificial intelligence initiatives.

Further, the vehicle firm has dealt with decreasing demand for its electric cars due to intensified competition. That forced Tesla to execute multiple price cuts to attract more customers.

WATCH: Tesla has cut prices in a number of its major markets, including China and Germany, following price cuts in the United States, as it grapples with falling sales and an intensifying price war for electric vehicles, especially against Chinese EVs https://t.co/06Yn5Ufqb6 pic.twitter.com/tdUUQrAyYF

— Reuters Business (@ReutersBiz) April 22, 2024

The firm remarked in the latest report,

“We recently undertook a cost-cutting exercise to increase operational efficiency. We also remain committed to company-wide cost reduction, including reducing COGS per vehicle. Ultimately, we are focused on profitable growth, including leveraging existing factories and production lines to introduce new and more affordable products.”

Meanwhile, the company plans to reduce operational and manufacturing costs to magnify profits. Furthermore, Tesla expects more returns from its AI, fleet, and software-based services.

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