Tesla profits have slumped by half. Can a cut price model save its fortunes?

The carmaker has announced a big fall in profits as demand for electric vehicles stalls, writes James Moore. Is this down to Elon Musk or is the entire electric vehicle industry suffering from engine problems?

Tesla CEO Elon Musk (AFP via Getty Images)

Is Twitter – sorry X – killing Tesla? The latest results from Elon Musk’s “other” business don’t make for happy reading. Wall Street has valued the electric car maker as a fully charged growth stock in anticipation of double-digit gains every quarter. But in the first three months of 2024, the company encountered engine problems. It stopped growing.

Earlier this month, for the first time in nearly four years, the carmaker posted a decline in quarterly deliveries – down 8.5 per cent – missing analysts’ forecasts in the process, an unforgivable sin on the street of dreams. Tesla has been cutting its prices but the tactic has failed to work.

Now it has posted its full financial results for the quarter – with profits falling to $1.1bn, down by 55 per cent compared to the same three months last year. Revenues were down 9 per cent. But despite the big fall in profitability, shares have rallied, largely as a result of Tesla’s plans to manufacture yet more lower-cost vehicles.