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The effects of the first quarter are expected to fuel fears that competition will continue in a larger percentage of a market facing a slowdown in electric car sales.
By Jack Ewing
Tesla reported on Tuesday that it made less money in the first three months of the year due to its tepid car sales, reinforcing investor concerns that the Elon Musk-led company is squandering ground in the electric vehicle market.
Profit fell 55% to $1. 1 billion from the first quarter of 2023, the company said, and profit fell 9% to $21. 3 billion.
A drop in profits was seen as inevitable after Tesla said this month that its first-quarter sales fell 8. 5 percent from a year earlier, and after the company announced plans to lay off more than 10 percent of its workers worldwide, or about 14,000 people.
The job cuts, which totaled more than 2,000 employees at the company’s factory in Fremont, California, and just about 2,700 at a factory in Austin, Texas, were interpreted as a sign that Tesla was struggling to align prices with declining revenue.
In the first quarter of 2023, Tesla earned $2. 5 billion and had one of the most productive profit margins in the industry, the company said a year ago. But it has been forced to lower its prices, it added in a new negotiating circular last week. For a while, this strategy seemed to help boost the company’s sales, but now Tesla seems to be struggling to attract buyers, even with lower prices.
Tesla’s operating profit margin in the last quarter was 5. 5%, part of the previous year and in line with what other automakers tended to earn.
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