Analysts expect Tesla's revenue to be $22.424 billion, adjusted net income to be $1.853 billion, and adjusted EPS to be $0.53, according to Bloomberg's unanimous expectations.
Tesla is set to announce its first-quarter 2024 earnings after the bell on Tuesday, April 23. Tesla's shares have seen a fall of nearly 30% in the first quarter because of growth bottlenecks. As analysts revise down estimates of Q1 earnings, an upside surprise may present a chance to rebound. Conversely, a miss on the expectation may exacerbate the downward pressure.
Analysts expect Tesla's revenue to be $22.424 billion, adjusted net income to be $1.853 billion, and adjusted EPS to be $0.53, according to Bloomberg's unanimous expectations.
Previous Quarter Review
In the final quarter of 2023, Tesla's overall revenue only grew by 3% from a year ago as its automotive sales barely increased, up by 1% annually. The operating margin came in at 8.2%, nearly halved from 16% in the fourth quarter of 2022. Tesla's net income more than doubled, thanks to a provision of $5.9 billion one-time non cash tax benefit. But excluding the amount, its earnings per share fell by about 39% year over year to $0.71. CEO Elon Musk also provided weak guidance and said the volume growth could be notably lower for 2024.
Nonetheless, Tesla delivered a record number of electric vehicles of about 1.8 million in 2023, up 38% from 2022. Revenue for the full year rose 15% to $82.42 billion. Notably, its energy storage deployment grew significantly last year, up 125% compared to 2022. But the sector only accounts for more than 6% of Tesla’s overall revenue.
Q1 Results Outlook
Tesla EPS could come in below consensus for 1Q as the recent 10% cut to its global workforce, slower growth in electric vehicle penetration and weaker than expected deliveries in the quarter suggest that capacity utilization may be significantly below demand. Strong execution over the next 12-18 months will be crucial for the carmaker to navigate what we believe to be a temporary dip in EV demand.
Tesla is pursuing a strategy to maximize profitability amid subdued demand, price increases, additional Model 2 production capacity, a ramp-up in Cybertruck output and heightened competition in China.
Tesla's Q1 EV deliveries fall short of expectations
Tesla reported a disappointing delivery figure for the first quarter, totalling 368,810, marking an 8.5% decrease compared with the same quarter last year and a sequential drop of 20%. Production also experienced a slowdown, decreasing by 12.5% from the previous quarter to 433,371 units. Tesla attributed this deceleration to two main factors: the temporary closure of the German factory following a power outage caused by arson in early March and shipment disruptions due to attacks by the Houthi militia.
Wedbush Securities analysts said that "1Q deliveries was a nightmare quarter for Tesla with China and global EV demand remaining very soft coming out of the gates for 2024." They noted that it "is a crucial period for [Tesla Chief Executive Officer (CEO) Elon] Musk to navigate Tesla through this Category 5 demand storm."
In January, the company indicated that it was in a transitional phase "between two major growth waves" due to the ramped-up production of the Cybertruck, which was launched in December 2023. Tesla had announced its intention to manufacture lower-cost electric vehicles, but according to Reuters, the plan was scrapped a week ago.
Automotive gross profit margins
Management has shifted its 2024 strategy to focus on preserving unit profits. This marks a change from 2023, when the firm cut prices to grow auto delivery volumes. We will see how this strategic change affects automotive gross profit margins, and whether margins are closer to fourth-quarter numbers of around 19% or experience a sizeable decline.
A heating up Chinese EV competition
Tesla also faced challenges of weakened Chinese demands in China, where sales contribute to approximately 22% of the EV maker's total revenue. Furthermore, intense competition from Chinese rivals has eroded some of Tesla's market share, notably BYD, whose delivery figures surpassed Tesla's in the final quarter of 2023. However, BYD experienced a significant decline in sales, relinquishing its lead to Tesla in the first quarter of 2024. Adding to the competitive landscape, Chinese phone maker Xiaomi has recently entered the market with its sporty electric vehicles, priced lower than Tesla's Model 3 in China. Xiaomi's entry is perceived as another threat to Tesla's position in the Chinese market.
Cybertruck Ambitions
It looks like Cybertruck has emerged as Tesla's bottom line growth this year, as indicated in its earnings report for Q4 2023. The company stated that it had the capacity to produce more than 125, 000 vehicles annually. CEO Elon Musk expected to deliver "somewhere on the order of a quarter-million units a year". However, he did not confirm if this could be achieved in 2024 as the production could take longer time than other models "given its manufacturing complexity".
Product Roadmap After Robotaxi News
Musk on April 5 said that the company will unveil its robotaxi, a next-generation self-driving vehicle first mentioned in 2019, on Aug. 8.
"Musk has said in the past that Tesla will make a car without controls for human use, saying in the past that [Full Self-Driving] will reach a point of full autonomous use for taxi and driverless scenarios," Wedbush analysts explained.
The robotaxi announcement came shortly after Musk denied a report that Tesla was abandoning its longstanding plan to create a low-priced EV, expected to be called the Model 2.
The analysts said that "Tesla right now is caught between 'two waves of growth' " as "patience is starting to wear very thin among investors," and that a robotaxi is "not the near-term answer." Wedbush said that the firm "remain[s] long term bullish however this is a crucial few months ahead for Musk and Tesla to give the Street its blueprint for growth into 2025."