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Tesla touts acceleration of affordable EVs, but Q1 results fall short of estimates

Published 04/23/2024, 04:20 PM
Updated 04/24/2024, 04:01 AM
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Investing.com -- Tesla (NASDAQ:TSLA) shares jumped in extended hours trading on Wednesday as the electric-vehicle maker's announcement that it was accelerating the launch of fresh EVs that included affordable models overshadowed fiscal first-quarter results that fell short of estimates due largely to waning EV demand.

The firm said in a filing on Tuesday that it planned to push forward the release of new versions of its cars, including cheaper options that could be made on existing manufacturing lines, ahead of its "previously communicated start of production in the second half of 2025."

"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," it added.

Many on Wall Street believe that a more affordable car is key to driving the mass-market adoption of Tesla's offerings and will help boost subscriptions of the company's higher-margin self-driving software.

"Amid the current price war, particularly in China - and with the prospects of the company venturing into the Indian market - the word 'affordable' resonated as music to the ears of shareholders," Investing.com analyst Thomas Monteiro said. "This means the company may just be able to use its gigantic production capacity more efficiently while maintaining the original proposal of its higher-end models."

Analysts at Goldman Sachs argued that Tesla's move to manufacture new models "using elements of the low-cost platform but on existing lines" may drive down capital expenditures and "mitigate intermediate to longer-term growth concerns."

For the first quarter, Tesla reported adjusted earnings per share of $0.45 on revenue of $21.03 billion, missing Wall Street estimates of $0.49 a share and $22.27B, respectively.

Tesla delivered 386,810 EVs during the quarter, down from 433,371 in the year-ago period.

Meanwhile, the company's price cuts on its EVs weighed on automotive gross margin -- a crucial gauge of Tesla's core operations. The measure fell to 11.6% in the first quarter from 17.6% in prior three-month period, missing estimates of about 15%.

Yasin Ebrahim contributed to this report.

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