There is an interesting contrast between the first-quarter results of two of the world’s biggest automakers, and it says a lot about the state of the market for electric vehicles.
Tesla’s March quarter numbers were, as expected, awful. Indeed, they were worse than forecast. The results of US car industry stalwart General Motors, however, surprised on the upside.
While Elon Musk had to announce that his company’s earnings had more than halved from the same quarter last year, tumbling 55 per cent to $US1.1 billion ($1.7 billion) after a 9 per cent drop in sales, his GM counterpart Mary Barra was able to unveil a 24 per cent jump in profits to almost $US3 billion.
Elon Musk had bad news for his shareholders, with profit down by more than half - but the stock soared anyway on hopes for its new, cheaper models.Credit: AP
The divergent outcomes relate to the types of cars produced. Tesla is completely exposed to the electric vehicle (EV) market; GM, while dabbling quite seriously in EVs, made all its money from internal combustion-powered vehicles.
The EV market is a mess, awash with excess capacity and experiencing waning growth in demand. That has forced EV manufacturers into a destructive cycle of price cuts in an attempt to move what has been a massive build-up in global inventories.
Tesla’s own inventory of cars nearly doubled relative to the December quarter, from 15 days to 28 days, as its deliveries fell by 20 per cent from their December quarter levels.
The EV market is a mess, awash with excess capacity and experiencing waning growth in demand.
Amid the price-cutting, its profit margin – once the biggest in the industry – halved to 5.5 per cent. Its gross margin, which peaked at more than 29 per cent two years ago, fell for the sixth consecutive quarter, to 17.4 per cent.
The supply-side swamping of the EV market relates to ever-increasing production, particularly in China, even as the strong growth in demand when the early adopters scrambled to buy electric cars has tapered off and may even have been sated.
Tesla’s profits are being sunk by a tide of electric cars
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24.04.2024
There is an interesting contrast between the first-quarter results of two of the world’s biggest automakers, and it says a lot about the state of the market for electric vehicles.
Tesla’s March quarter numbers were, as expected, awful. Indeed, they were worse than forecast. The results of US car industry stalwart General Motors, however, surprised on the upside.
While Elon Musk had to announce that his company’s earnings had more than halved from the same quarter last year, tumbling 55 per cent to $US1.1........
© The Sydney Morning Herald
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