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Tesla Profit Drops 55%, But Shares Rise Amid Plans for Affordable Vehicles

Tesla

Tesla’s profit took a hit, dropping by 55% due to fierce competition in the electric vehicle market. However, the company’s shares surged as CEO Elon Musk announced plans to ramp up production of more affordable models.

In the first quarter, Tesla reported profits of $1.1 billion, down significantly from $2.51 billion a year ago.

Despite this decline, Tesla’s stock jumped by 11% following Musk’s announcement that production of new, budget-friendly vehicles would begin in the latter half of next year, potentially even earlier.

Musk mentioned during a conference call with analysts that these new models would leverage both next-generation platform advancements and existing platform features.

He emphasized that the production of these vehicles wouldn’t rely on the establishment of new factories or extensive production lines.

Details about the new vehicles were kept sparse, with Musk teasing that more information would be disclosed in August.

He indicated that Tesla should be viewed not just as an electric car manufacturer but also as an AI robotics company, emphasizing the potential of autonomous vehicles.

Despite Tesla’s ambitious plans, the company faced challenges over the past year. Supply chain disruptions, including Houthi attacks on shipping routes in the Red Sea and an arson attack on a production facility in Germany, impacted vehicle deliveries, which decreased by 8.5% in the first quarter.

Additionally, Tesla’s shares have experienced a significant decline since July of the previous year.

To adapt to these challenges and prepare for future growth, Musk announced a workforce reduction of over 10% in a memo to Tesla employees earlier this month.

He emphasized the importance of maintaining a lean and innovative organization to navigate the company through its next growth phase.

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