Tesla Robotaxi on the Way, Ride-Hailing in Development

Image: Walter Isaacson

Tesla released results for the first quarter of 2024. The company revealed strategic achievements, teased acceleration of the Robotaxi and Ride-Hailing Functionality programs, and also talked about slowing in its financial growth.

Revenue

Total revenue declined 9% YoY in Q1 to $21.3B. YoY, revenue was impacted by reduced vehicle average selling price; decline in vehicle deliveries, partially due to the Model 3 update in the Fremont factory, Giga Berlin production disruptions, and negative FX impact.

Profitability

Tesla's operating income decreased YoY to $1.2B in Q1, resulting in a 5.5% operating margin. YoY, operating income was primarily impacted by reduced vehicle ASP, increase in operating expenses, cost of Cybertruck production ramp, and decline in vehicle deliveries. At the same time, the company achieved lower cost per vehicle, including lower raw material costs, freight, and duties, gross profit growth in Energy Generation and Storage including IRA credit benefit, and higher FSD revenue recognition YoY due to the release of Autopark feature in North America.

Cash

Quarter-end cash, cash equivalents and investments in Q1 were $26.9B. The sequential decrease of $2.2B was a result of negative free cash flow of $2.5B, driven by an inventory increase of $2.7B and AI infrastructure capex of $1.0B in Q1.

Factory productivity

Tesla said the decline in production was due in part to an early ramp-up phase of production of the updated Model 3 at its Fremont factory and a shutdown at Giga Berlin due to supply diversions caused by the Red Sea conflict and arson. Production at Giga Shanghai has been reduced due to seasonality and planned shutdowns ahead of the Chinese New Year. However, this is a temporary phenomenon and demand usually increases throughout the year. In addition, Tesla vehicles will be supplied to Chile from Giga Shanghai.

The company reported that Model Y production at Giga Texas increased to a record high and unit costs fell to a record low. The Cybertruck ramp continued successfully at the factory, with consistent cost reductions. In April, Tesla achieved a new production record by producing more than 1,000 Cybertrucks in one week.

Robotaxi is on the way

In the report, Tesla said it will begin production of new vehicle models earlier than previously planned. These models will also include more affordable cars. This acceleration is due to changes in vehicle architecture, which includes the use of old and new technologies. Thus, the company will be able to produce new cars on the same manufacturing lines as its current vehicle line-up. Tesla's purpose-built robotaxi product will continue to pursue a revolutionary “unboxed” manufacturing strategy.

Tesla teases Ride-Hailing Functionality

In the earnings release, the company gave us a preview of Ride-Hailing Functionality. It will be integrated into the Tesla mobile application before the launch of the Robotaxi network. The feature will have a number of unique benefits, such as music, climate control, and vehicle tracking via a 3D map.