Tesla Calls Itself an AI, Robotics Company as Profits Plunge 55% 

There was nothing electric about electric vehicle (EV) maker Tesla’s latest financial results.

The company reported its first quarter 2024 earnings results Tuesday (April 23), disclosing a 55% drop in profits when compared to the same period last year.

“We experienced numerous challenges in Q1, from the Red Sea conflict and the arson attack at Gigafactory Berlin, to the gradual ramp of the updated Model 3 in Fremont. Excluding Cybertruck and unscheduled downtime, our COGS [cost of goods sold] per unit declined sequentially, driven primarily by lower raw material costs,” company executives told investors on Tuesday’s earnings call.

“Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs. While positive for our regulatory credits business, we prefer the industry to continue pushing EV adoption, which is in line with our mission,” leadership added.

While Tesla’s stock has nearly halved since the start of the year, experiencing a 43% decline leading up to the earnings announcement, the stock was up more than 10% after hours.

Observers believe investors could be embracing the news that Tesla announced an update to its future vehicle lineup, planning to move into production lower-cost models, like its starting-at-$299-per-month (in the U.S.) Model 2.

The company’s financial filings also noted that its “purpose-built robotaxi product will continue to pursue a revolutionary ‘unboxed’ manufacturing strategy.”

Read more: Declining Sales, Production Setbacks Add Miles to Bumpy EV Journey

“We are an AI [artificial intelligence], robotics company — if you value us otherwise, the right answer is impossible to the questions being asked. If someone doesn’t believe Tesla will solve autonomy, they should not be an investor in the company,” said Tesla CEO Elon Musk during the investor Q&A portion of Tuesday’s call.

And that was a major theme of the company’s earnings call — that it should be considered an autonomy company, not an automobile manufacturer.

“We are excited about our autonomy road map, it is only a matter of time before we exceed the reliability of humans — we are really heading toward an EV, autonomous future,” Musk told investors, stressing that, “In the future, gasoline cars that are not autonomous will be like riding a horse.”

Of course, the comments about Tesla’s direction come at a time when the electric vehicle market is at a critical juncture, with traditional and new players vying for dominance. The company’s financial performance during this period has been closely watched by investors and industry analysts, especially given the volatile stock performance leading up to the earnings release.

Read more: Musk Promises Tesla Robotaxis Amid Rocky EV Market

Tesla’s shares are coming off of their longest down period in years, as investors reconsidered their investment thesis in light of Musk’s famously volatile comments around the company’s autonomy-first direction. The confirmation that a lower-cost EV line would be entering production is being seen as soothing investor nerves against a backdrop where Tesla is experiencing slowing growth, thinning margins and sales.

“We recently undertook a cost-cutting exercise to increase operational efficiency. We also remain committed to companywide cost reduction, including reducing COGS per vehicle. Ultimately, we are focused on profitable growth, including by leveraging existing factories and production lines to introduce new and more affordable products,” the company said in its materials, noting during the call that they expected headcount savings of over $1 billion on a run-rate basis.

“While many are pulling back on their investments, we are investing in future growth — including our AI infrastructure, production capacity, our Supercharger and service networks and new products infrastructure — with $2.8B of capital expenditures in Q1,” Tesla explained in its materials.

The company increased AI training compute by more than 130% in Q1, and Elon also made specific and laudatory mention of Tesla’s humanoid robot project, Optimus, telling investors that, “Optimus will be in the factory doing useful tasks by the end of the year. Optimus will be more valuable than anything else Tesla does combined.

“A sentient humanoid robot able to navigate reality and do tasks ad hoc. That’s what is going to happen, and Tesla is best positioned of any robot maker to reach volume reduction with efficient inference on the robot itself,” Musk added.

And Optimus serves as another proof point of the Tesla ecosystem story. One that appears to be separating itself from the EV story.

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