Tesla starts production of more affordable model, reports steepest drop in quarterly revenue in over a decade

A Tesla electric vehicle is seen leaving a Tesla showroom and service centre in Ottawa on Friday, Aug. 30, 2024. THE CANADIAN PRESS/ Patrick Doyle

Tesla says it has started production of a more affordable model and expects volume production in the second half of the year.

The company reported the steepest decline in quarterly revenue in more than a decade, with a 12 per cent fall, as it battles strong competition from cheaper electric vehicles and a backlash against CEO Elon Musk’s political views.

Revenue fell to US$22.5 billion for the April-June quarter from US$25.50 billion a year earlier. Analysts on average were expecting revenue of US$22.74 billion, according to data compiled by LSEG.

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The company reported a second straight quarterly revenue drop despite rolling out a much-awaited refreshed version of its best-selling Model Y SUV that investors had hoped would rekindle demand.

Much of the company’s trillion dollar valuation hangs on its bet on its robotaxi service - a small trial of which was started in Austin, Texas, last month - and developing humanoid robots.

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However, investors are worried about whether Musk will be able to give enough time and attention to Tesla after he locked horns with U.S. President Donald Trump by forming a new political party this month. He had promised weeks earlier that he would cut back on government work and focus on his companies.

A series of high-profile executive exits, including a longtime Elon Musk confidant who oversaw sales and manufacturing in North America and Europe and left Tesla last month, is also adding to the concerns.

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Reporting by Akash Sriram in Bengaluru and Abhirup Roy in San Francisco; Editing by Peter Henderson, Matthew Lewis and Anil D’Silva