Tesla soars as Musk's cheaper EVs calm fears over strategy

Musk said Tuesday that the new vehicles Tesla is accelerating “will use aspects of the next-generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle lineup.”

“We are left asking — is this just a refreshed M3/Y?” Chris McNally, an Evercore ISI analyst with the equivalent of a hold rating on Tesla’s stock, wrote in a report, referring to the Model 3 and Model Y.

The new plan isn’t contingent on any new factory or production lines and should eventually enable Tesla to get to more than 3 million vehicles of production capacity, Musk said. The company said in its earnings presentation that its current installed capacity is more than 2.35 million.

Tesla will continue work on a new module-based “unboxed” manufacturing process for the dedicated robotaxi Musk teased earlier this month. The CEO referred to it on the call as as the Cybercab.

While Tesla remains the dominant EV maker in the U.S. market, its financial performance has sagged for several quarters. Adjusted earnings per share fell to 45 cents in the first three months of the year, short of Wall Street’s expectation for 52 cents a share. Revenue dropped almost 9% to $21.3 billion, roughly in line with its first year-over-year drop in deliveries since 2020. This also was short of the $22.3 billion analysts were expecting.

Tesla’s vehicle inventory swelled to 28 days, nearly double the 15 days at the end of the last quarter. The metric captures how long it takes for a car company to move vehicles off its lots.

“We expect the inventory build to reverse in the second quarter and free cash flow to return to positive” territory, Chief Financial Officer Vaibhav Taneja told investors on the call.

The Austin-based EV maker kept its near-term growth expectations in check, saying growth in vehicle deliveries may be “notably lower” than last year.

Tesla initiated its biggest-ever round of layoffs last week, announcing plans for a more than 10% cut to headcount. Bloomberg has reported Musk has pushed for a 20% reduction. Two senior executives announced their departures in the midst of the restructuring. Another prominent manager, Tesla’s head of investor relations Martin Viecha, said during Tuesday’s call that he’ll be leaving the company.

(With assistance from Max Chafkin, Subrat Patnaik and Craig Trudell.)