Tesla’s first-quarter net income plummeted 55%, but its stock price surged in after-hours trading Tuesday as the company said it would move up production of new, more affordable vehicles.
“This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times,” the letter said. 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. Tesla also blamed an arson attack at its German plant and factory downtime as it switched factories to an updated version of the Model 3 sedan.
Many analysts say the sales decline raises questions about demand for Teslas and other electric vehicles. “We retain some level of skepticism on Tesla's growth prospects, but also see opportunities as the company will unveil future growth drivers in the coming months,” Murphy wrote, adding that he maintains a neutral rating on the stock.