According to news on April 24, after the market closed on Wednesday, U.S. time, electric vehicle manufacturer Tesla announced its financial report for the first quarter of 2024. The financial report shows that Tesla achieved revenue of US$21.301 billion in the first quarter, down 9% year-on-year, slightly lower than analysts' expectations of US$22.3 billion; net profit was US$1.129 billion, down 55% year-on-year.
After the release of the financial report, Tesla CEO Elon Musk, Chief Financial Officer Vaibhav Taneja, Vice President of Automotive Engineering Lars Moravy) and head of investor relations Martin Viecha (Martin Viecha) and other executives attended the earnings call to introduce the company's first-quarter results and answer questions from investors and analysts.
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Musk opened the conference by reviewing first-quarter results and acknowledging that market acceptance of electric vehicles is under pressure, while noting that other automakers are moving toward hybrid vehicles. Musk emphasized that Tesla will not adopt this strategy. He revealed that Tesla is accelerating the launch of new models, including a more affordable electric car. These new vehicles will utilize new platforms and existing production lines and are expected to bring Tesla's annual production capacity to 3 million vehicles.
Musk also reiterated the value and potential of the Fully Self-Driving System (FSD) V12 and said the $99 monthly subscription fee is to make it easier for customers to use the FSD system. He also mentioned that Tesla plans to launch a purpose-built robot taxi called Cybercab later this year. In addition, Musk Tesla has approximately 35,000 sets of H-100 artificial intelligence chips.
Musk said: “We are moving towards a self-driving future of electric vehicles. Gasoline cars are as outdated as riding horses and using flip phones.” As before, he also expressed his gratitude to the Tesla team for their hard work.
Chief Financial Officer Tanya pointed out that although revenue fell in the first quarter, it was mainly affected by seasonal fluctuations and some macroeconomic factors. She revealed that the cost of Model Y electric vehicles produced in the Austin and Berlin factories is approaching the level of the Fremont factory. Tanya said Tesla is cutting prices and offering attractive payment plans on its cars and subscription services to help boost demand.
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Tanya also pointed out that Tesla's energy business performed well, with profit margins reaching a record 24.6% in the first quarter. “The future is very bright and this journey has been very rewarding,” she said.
Q&A session for small and medium investors
Regarding 4680 battery production, Tesla said that compared with the fourth quarter of 2023, 4680 battery production in the first quarter achieved an increase of 18% to 20%.
Regarding Tesla’s Optimus humanoid robot Optimus Prime, executives said that the robot is currently in use in operations and can perform simple factory tasks. Tesla plans to begin initial production of Optimus robots for internal use this year.
“Optimus is already capable of performing simple factory tasks in the lab,” Musk noted, adding that Tesla may begin offering limited production of Optimus to external customers late next year. Musk emphasized: “Optimus will be worth more than every other company combined…Tesla's artificial intelligence inference technology is completely different from any other company.”
Regarding the regulatory status and development of FSD, Musk said that several states have already begun to accept autonomous vehicles. He believes that once regulators confirm that FSD is safer than human driving, they will approve its application. But he also emphasized that it is now crucial to provide sufficient data to prove that self-driving cars are far safer than human-driven cars. Musk also confirmed that Tesla is in discussions with an automaker about FSD licensing: “We are in talks with an automaker.”
Musk also revealed that “Tesla will operate this fleet,” hinting that the company will manage its robotaxi network. He reiterated that Tesla's robotaxi service will combine features of Airbnb and Uber.
In addition, Musk revealed that Tesla's Hardware 5 on-board computer is expected to be installed on electric vehicles by the end of 2025. He explained: “The hardware design is basically completed and installation is expected to begin by the end of next year.”
Tesla executives said the company has several models that will provide deep self-driving insights in future versions of FSD, but these models will not be released to the public. They also noted that the company will focus more on self-driving technology, with a goal of deploying 5 million to 7 million self-driving vehicles.
Regarding Tesla’s economical electric cars, Vice President of Automotive Engineering Mo Raven reiterated Musk’s point of view, saying that Tesla is upgrading its product line and aims to provide cheaper electric cars to consumers faster.
Tesla executives said that although the weekly production of Cybertruck has reached 1,000 vehicles, challenges still exist; construction of the electric truck Semi factory in Reno, Nevada has begun.
They also expect annual Megapack deployments to reach 20GWh to 40GWh.
Analyst Q&A session:
Bernstein analysts asked about Tesla's product line, and Musk chose not to answer. The analyst further asked whether Musk has any plans to exit Tesla, considering his relationship with multiple companies. Musk responded: “Tesla takes up most of my working time and I'm going to make sure it continues to thrive.”
Analysts at Morgan Stanley asked Tesla about its sales growth expectations for 2024. Musk expressed optimism that sales this year will exceed last year's. The analyst is also concerned about the competitive pressure that Chinese automakers may learn from Tesla. Musk said he did not know the specific plans of his competitors, but he emphasized that Tesla will continue to persist in the Chinese market.
Musk reiterated Ark Investment’s view that Tesla should be considered an artificial intelligence company. He quoted Cathie Wood as saying: “Tesla is an artificial intelligence company.” Those who only think of Tesla as a car manufacturer simply don't understand the company, adding: “We are taking 'automation' 'Technology integrated into the car.”
Analysts at Piper Sandler agreed with Tesla's emphasis on artificial intelligence and asked Musk whether he intended to acquire 25% of Tesla's shares to gain greater voting rights. Musk responded that Tesla would solve the challenges of self-driving technology no matter what, joking:“Even if aliens abducted me tomorrow, Tesla would have to solve the autonomous driving problem.”But he is cautious about the future of Optimus robots and hints that he is facing some important decisions. He also revealed that Tesla may conduct stock buybacks.
When asked about the recent layoffs, CFO Tanya emphasized that this was the structural optimization the company needed to achieve the next stage of growth. “Like pruning a tree, it's a necessary adjustment,” she said. “The future is bright, we just have to get through this period.” Musk added: “As far as I know, we have not abandoned any important projects.” He mentioned that Tesla has been in a period of growth since 2019, ” Now is the time to make organizational adjustments for future growth.”
Goldman Sachs analysts asked about the regulatory status and commercialization progress of FSD technology. Musk insists that Tesla's FSD solution is low-cost, simple and effective, which he believes proves their approach is correct.
Tanya also pointed out that although OEM manufacturers are very eager to achieve cooperation as soon as possible, it may take three years from signing an FSD licensing agreement to actual application in cars.
Goldman Sachs analysts further asked about the subsequent impact of Tesla’s price adjustment strategy. Musk responded that by lowering costs, Tesla would be able to achieve meaningful positive free cash flow, and other executives noted that the negative impact of the price cuts was being compensated for by cost controls.
Analysts at the Canadian Investment Bank are concerned about the possibility that FSD will soon enter the Chinese market. Musk revealed: “We are accelerating the promotion of cars with new features in multiple markets.” He also emphasized that FSD can run well even without adjustments, but for the final launch, regulatory approval and necessary local adjustments.
The analyst also mentioned that first-quarter deliveries were affected by supply chain issues. Tesla executives responded that there are many factors affecting deliveries, including seasonality and macroeconomic pressures. Musk is optimistic that the situation will improve in the second quarter and admits that Tesla's car purchase process needs to be simplified. “Our goal is to optimize the purchase process so that consumers can buy a car in one minute.”
Oppenheimer analysts asked about Tesla's progress on its self-driving taxis. Executives responded that while developing artificial intelligence, they are considering how to effectively use existing computing resources. They pointed out that all Tesla electric vehicles are equipped with self-driving hardware, and it makes sense to fully utilize these vehicles to complete a variety of tasks.
Regarding the production increase of 4680 batteries, Musk said that this is not a priority in the short term, but it is expected that by the end of this year, the production of 4680 batteries will exceed the production capacity of suppliers. Mo Ruiwen, vice president of automotive engineering, pointed out that the mass production progress of 4680 batteries is mainly closely related to the production of Cybertruck.
Analysts at Wolfe Research also asked about the 4680 battery situation, and Musk responded that battery supplier quotes have become more competitive due to oversupply in the market. This is mainly due to significant reductions in orders from other automakers. Musk concluded: “Battery supply will go through peaks and troughs.”
Vicha, head of investor relations, announced that he will leave Tesla after seven years of service. He expressed his gratitude for his cooperation with Tesla's management team, and Musk also specifically thanked Vicha for his contribution to the company.