Tesla’s first-quarter net income may have plummeted 55 per cent, but the company’s stock price surged in after-hours trading on Tuesday as it announced plans to accelerate the production of new, more affordable vehicles. The Austin-based company reported earnings of $1.13 billion US from January through March, down from $2.51 billion US in the same period last year.
Investors and analysts were eagerly awaiting news on how Tesla planned to address its stock slide and boost sales. In a letter to investors, the company revealed that production of smaller, more affordable models would begin sooner than expected. These models, including the anticipated Model 2 small car priced at around $25,000 US, will utilize new-generation vehicle underpinnings and some features of current models.
During a conference call with analysts, CEO Elon Musk hinted at production starting in the second half of next year, if not sooner. Musk also mentioned that no new factories or massive production lines would be necessary for the new vehicles. While specifics on the new models were scarce, Musk expressed confidence in Tesla selling more vehicles this year than the 1.8 million sold in the previous year.
Tesla’s stock rose over 11 per cent in after-hours trading, following a more than 40 per cent decline earlier this year. Analysts believe that Tesla’s clearer guidance on future plans has reassured investors, potentially stabilizing the stock. However, concerns remain about sales performance in the second quarter and the company’s gross profit margin, which fell to 17.4 per cent from 19.3 per cent a year ago.
Despite challenges, Tesla’s focus on new, more affordable models and the upcoming unveiling of a fully autonomous robotaxi signal the company’s commitment to future growth and innovation.