Tesla: Profitability Down with Decreased Sales, Intensifying EV Competition
Planning revenue increases from next-gen platform vehicles, software, and charging infrastructure
2024/08/19
- Summary
- Global production: Volume starts to decline in 2024 due to production cutback in China
- Global sales situation: Sales down despite broad-based price cuts from 2023 onward
- New products announced after 2023: Cybertruck, Semi, and new Model 3
- Future models: Compact EV to be launched in the first half of 2025
- Battery production: Nevada plant expansion to increase production of 4680-type cells
- Charging Network: OEMs increasingly adopt Tesla's charging system
- Autonomous driving: Aiming to contribute to profitability through continued investment and promotional activities
- Regional expansion of sales/business: Expanding into growth markets including Asia
- Financial results: Sales will continue to increase, but operating and net incomes will deteriorate significantly in 2024
- GlobalData Sales Forecast: Tesla’s global sales will gradually increase to 2.05 million in 2027
Summary
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| Cybertruck, which began volume production in 2024 (Source: Tesla Q1 2024 Update) |
Tesla's global production and sales volume continued to increase on an annual basis, reaching 1.84 million units produced and 1.81 million units sold in 2023, but both production and sales began to decline in 2024, mainly due to lower sales in the increasingly competitive EV market in China. In the second quarter of 2024, global production fell 14.4% year-over-year (y/y).
The company will aggressively invest in product expansion and production increases, including the introduction and expanded production of the "Cybertruck" at the Texas plant starting at the end of 2023 and the start of expansion of the Nevada Battery Plant for the mass production of the "Semi" trailer truck. On the other hand, regarding the new Mexican plant that it announced it would build in early 2023, the company is taking a cautious approach, keeping an eye on the trends of the US presidential election. The company confirmed its plan to start production of compact EVs based on a new platform in the first half of 2025, but production will begin first at its Texas plant rather than launching in Mexico. The launch event for the self-driving car (robo-taxi) scheduled for August has been postponed to October.
Although sales continue to show an upward trend, operating income decreased for the first time on an annual basis in 2023 (-34.9%) due to reduced sales in the major markets of China and the United States and price reductions to maintain competitiveness, and in 2024 on a quarterly basis, both operating income and net income will be negative compared to the same period of the previous year for two consecutive quarters (-33.1% and -45.3%, respectively, in Q2).
Tesla is now looking to increase profits in its energy-related and service divisions as its competitive edge in dominating the EV market as a pioneer weakens and its profitability from vehicle sales declines.
Tesla reported that it is currently at a plateau in preparation for the next growth stage, which will be driven by autonomous driving technology and new mass-produced vehicles based on next-generation platforms. Furthermore, the company expressed confidence in the expansion of its business, emphasizing that it is making progress in investments and technology development in robo-taxis, FSD (Full Self-Driving), AI, and other areas that it has positioned as pillars of long-term profitability.
The question now is whether the company can continue to meet the expectations of the market and investors with the innovation and growth potential that have driven its rapid growth.
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