Active Stocks
Thu May 30 2024 12:13:50
  1. Tata Steel share price
  2. 165.80 -4.82%
  1. NTPC share price
  2. 363.80 -0.22%
  1. State Bank Of India share price
  2. 823.70 0.09%
  1. Tata Motors share price
  2. 935.10 -0.91%
  1. Wipro share price
  2. 444.50 -1.42%
Business News/ Companies / News/  Tesla layoffs to save $1 billion annually, Elon Musk calls it ‘necessary’; affordable vehicles on the cards
BackBack

Tesla layoffs to save $1 billion annually, Elon Musk calls it ‘necessary’; affordable vehicles on the cards

Elon Musk-owned Tesla, which recently announced layoffs of some 14,000 workers, has also undertaken a recall of its Cybertruck due to an acceleration problem. The company's Q1 profits fall 55%, but shares rose on news Tesla's new models will include affordable ones.

Tesla CEO Elon Musk. (AP Photo)Premium
Tesla CEO Elon Musk. (AP Photo)

Elon Musk-owned Tesla on Tuesday reported a big drop in its quarterly profits amid cut-throat competition in the electric vehicle market and layoffs. The world's top EV maker made $1.13 billion from January to March, down 55% from the year-ago quarter, on revenues of $21.3 billion. 

The billionaire called the recent job cuts at Tesla a “necessary step" to reorganise the company for the next phase of growth. Recently, Tesla had announced layoffs of some 14,000 workers. 

During a conference call with analysts, Chief Financial Officer Vaibhav Taneja said job cuts by more than 10% will save Tesla over $1 billion annually in costs, AFP reported. 

He also stated that Tesla  planned to “accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025". "The new vehicles will include more affordable models," said Tesla. 

At the outset of Tuesday's conference call, Elon Musk said production on the vehicles will start either in early 2025 or in late 2024. He explained that the vehicles will use new aspects of the next generation platform as well as aspects of Tesla's current platform. 

“So it's not contingent on any new factory or massive new production line. If somebody doesn't believe Tesla is going to solve autonomy, I think they should not be an investor," the billionaire said.

Tesla Q1 results

Tesla's first-quarter net income plummeted 55%, however, its stock price surged in after-hours trading on Tuesday as the company announced it would accelerate the production of new, more affordable vehicles. 

The Austin, Texas, company said it made $1.13 billion from January through March, compared with $2.51 billion in the same period a year ago.

Tesla reported that first-quarter revenue was $21.3 billion, down 9% from last year, as worldwide sales dropped nearly 9% due to increased competition and slowing demand for electric vehicles.

The company’s gross profit margin, the percentage of revenue it gets to keep after expenses, fell once again to 17.4%. A year ago it was 19.3%, and it peaked at 29.1% in the first quarter of 2022, as per AP reports. 

Shares of Tesla rose 11% in trading after Tuesday’s closing bell, but they are down more than 40% this year. The S&P 500 index is up about 5% for the year.

 

(With inputs from agencies)

You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 24 Apr 2024, 07:41 AM IST
Next Story footLogo
Recommended For You