Tesla reports its worst earnings since 2012 - but promise of cheap EVs sees share price jump almost 10 percent

Tesla reported first-quarter earnings that were even lower than expected - but its commitment to develop affordable cars boosted its share price almost 10 percent after markets closed.

Its first quarter revenue was $21.3 billion, below Wall Street estimates of $22.3 billion, and 9 percent less than the $23.3 billion it made in the same quarter last year, the company reported on Tuesday afternoon.

It is the steepest year-over-year drop since 2012.

Good news for Tesla was that it produced 1,000 Cybertrucks in a single week in April, a promising sign it will be able to ramp up production of the new truck moving forward.

It also said it would bring forward the production of more affordable cars, interpreted as a key sign it may be able to generate increased earnings in the foreseeable future.

'We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025,' read the report.

'These new vehicles, including more affordable models, will utilize 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 line-up.'

Musk has also shared on X that he views automated self-driving taxis, or robotaxis, as a crucial market for Tesla. Earlier this month it announced an unveiling on August 8. 

The EV maker's share price has had fallen some 40 percent this year, making it one of the worst performing companies in the S&P 500.

Exacerbating concerns among investors was that the company reportedly canceled its project to build the 'Model 2.' The car was rumored to cost around $25,000 and for many analysts was a vital product for Tesla to crack the mass market.

Earlier this month the company also reported delivery numbers for the quarter, which fell very short of expectations and hinted that revenue would not be high. 

It delivered 386,810 vehicles in the first three months of the year, down 20 percent from the previous quarter and almost 9 percent from the same period in 2023.

Wedbush analyst Dan Ives described it as 'a train wreck into a brick wall quarter for Musk.'

A source of additional headache for Tesla this quarter has come from Chinese competition. While it was developing the Cybertruck, companies like BYD, Li Auto and Nio have ben focusing on affordable EVs for the mass market.

They are now producing cars for as little as $10,000 - around a third of the price of the cheapest electric car available in the US.

In a bid to compete, Tesla this weekend started slashing the price of its cars around the world.

Tesla cut the starting price of the Model 3 in China by 14,000 yuan, or $1,900, to 231,900 yuan, or $32,000, its official website showed on Sunday.

In Germany, the price of the Model 3 rear-wheel-drive was slashed by 2,000 euros to 40,990 euros, or around $43,600. There were also price cuts in many other countries in Europe, the Middle East and Africa, a Tesla spokesperson told Reuters. 

The Cybertruck has also been a source of concern among investors. The unconventional vehicle bears little in common with typical cars and features many costly gimmicks, such as its stainless steel body panels.

Then last week the automaker recalled nearly 4,000 Cybertrucks in order to fix an accelerator pedal fault that could cause the EV to accelerate at top speed.