Mounting competition in the stuttering electric vehicle market is taking 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."
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.
Tesla didn't immediately respond to a request for comment.
The recent financial reports reveal a challenging period for Tesla in the current year. The company stated earlier in the month that it had delivered 386,810 vehicles in the first quarter, a decrease of almost 9% compared to the 423,000 deliveries made in the same period last year. Tesla attributed this decline in part to the introduction of an updated version of the Model 3 sedan at its Fremont, California factory.
Plant closures resulting from shipping disruptions in the Red Sea and an arson incident that caused a power outage at its German factory also impacted Tesla's delivery numbers.
Adding to its woes, Tesla announced on April 19 that it is recalling nearly 4,000 Cybertrucks due to a defective accelerator pedal.
With increasing competition both internationally and in the U.S., Tesla is facing challenges as other automakers rush to launch new and more cost-effective EV models. While Tesla dominated 80% of EV sales in the U.S. between 2018 and 2020, its market share dropped to 55% in 2023, according to Cox Automotive.
Despite a slight decline in EV sales this year, the long-term outlook points towards continuous global growth. The International Energy Agency (IEA) estimates that automakers worldwide will sell around 17 million EVs this year, an increase from 14 million sold last year.
According to the IEA, "Electric cars made up approximately 18% of all car sales in 2023, up from 14% in 2022 and a mere 2% five years earlier in 2018." These statistics suggest a strong and steady growth as electric vehicle markets mature.
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