Tesla profit plunges 55%, as shares bounce on plans for cheaper vehicles

The Texas-based company reports profits of $1.1bn in the first quarter, down from $2.51bn a year ago.

Tesla has had a difficult year amid increasingly fierce competition in the electric vehicle market [Patrick T Fallon/AFP]

Tesla reported a 55 percent drop in profit amid fierce competition in the electric vehicle market, but shares rallied on plans to accelerate the production of more affordable models.

The Austin, Texas-based company on Tuesday reported profits of $1.1bn in the first quarter, down from $2.51bn a year ago.
But shares of Tesla soared by 11 percent after CEO Elon Musk said that production of new, more affordable vehicles would begin in the second half of next year “if not late this year”.

The models “will use new aspects of the next generation platform as well as aspects of our current platform”, Musk said on a conference call with analysts.

“So it’s not contingent on any new factory or massive new production line.”

Musk did not elaborate on the new vehicles, saying more details would be released in August.

“I think we’ve said all we will on that front,” he said.

Musk, who has touted autonomous robotaxis as a growth engine for the company for years, also spoke at length about the promise of autonomous vehicles, saying Tesla “should be thought of as an AI robotics company”.

“If somebody doesn’t believe Tesla is going to solve autonomy, I think they should not be an investor,” he said.

Tesla, the second-biggest producer of electric vehicles after China’s BYD, has had a difficult year, in part due to supply chain disruptions caused by Houthi attacks on shipping in the Red Sea and an arson attack by environmental activists at a production facility in Germany.

Vehicle deliveries fell by 8.5 percent in the first quarter and the company’s shares have lost nearly half their value since July last year.

Musk earlier this month told staff in a memo that the company would lay off more than 10 percent of its global workforce to be “lean, innovative and hungry for the next growth phase cycle”.

Source: Al Jazeera and news agencies