Mounting competition in the stuttering electric vehicle market is taking some of the juice out of Tesla.
The automaker's first-quarter profit plummeted 55% as falling global sales and price cuts sliced into the EV maker's revenue and earnings. The company said Tuesday it made $1.13 billion in profit from January through March, compared with $2.51 billion in the same period a year ago. Revenue was $21.3 billion, down 9% from last year, the company said.
Tesla executives blamed the dip partly on EV sales being "under pressure as many carmakers prioritize hybrids over EVs." Company officials said phasing in an updated version of the Model 3 sedan at its Fremont, California, factory and plant shutdowns due to shipping diversions in the Red Sea also played a role in the quarterly earnings.
The weak earnings report landed on the same day Tesla announced it plans to lay off nearly 2,700 workers at its factory in Austin, Texas. The layoffs will happen during a two-week period starting June 14, according to a layoff notice. Tesla said last week that it's planning to lay off more than 10% of its roughly 140,000 workers globally.
The latest financial results continue what has been tough stretch for Tesla this year. The company said earlier this month that it delivered 386,810 vehicles in the first quarter, almost 9% below the 423,000 it delivered in the year-ago period. Tesla blamed an arson attack that knocked out power to its German factory for the lowered deliveries.
In another black eye for the company, Tesla said on April 19 that it is recalling nearly 4,000 Cybertrucks because of a faulty accelerator pedal.
In positive news for the company, Tesla said it plans to launch new, more affordable vehicle models in the second half of 2025. The announcement, while short on specifics, cheered investors and pushed Tesla shares up more than 10% in after-hours trading.
"These new vehicles, including more affordable models, will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up," the company said in a presentation shared with Wall Street analysts.
Tesla also said Tuesday it will continue investing billions of dollars in developing self-driving cars, installing EV charging stations and supporting its factories around the world.
Tesla is facing increasing competition overseas and in the U.S. as automakers race to introduce new, and more affordable, EV models. Between 2018 and 2020, Tesla accounted for 80% of EV sales in the U.S., but that figure fell to 55% in 2023, according to Cox Automotive.
Although the pace of EV sales has dipped this year, the longer term forecast shows continued global growth. Automakers around the world will sell about 17 million EVs this year, up from 14 million last year, according to a recent estimate from the International Energy Agency (IEA).
"Electric cars accounted for around 18% of all cars sold in 2023, up from 14% in 2022 and only 2% five years earlier, in 2018," the IEA said. "These trends indicate that growth remains robust as electric car markets mature."
—The Associated Press contributed to this report.
Khristopher J. Brooks is a reporter for CBS MoneyWatch. He previously worked as a reporter for the Omaha World-Herald, Newsday and the Florida Times-Union. His reporting primarily focuses on the U.S. housing market, the business of sports and bankruptcy.
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