01—Abstract
Summary
Summary of the 8-K filed April 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Tesla's Form 8-K filed April 23, 2024 furnishes its First Quarter 2024 Update (Exhibit 99.1), showing a sharp year-over-year deterioration.
Total revenue fell 9% to $21.3Ba, and deliveries fell 9% to 386,810 vehicles. GAAP gross margin compressed 199 basis points to 17.4%, and GAAP operating margin fell to 5.5% from 11.4% a year earlier, as GAAP operating income dropped 56% to $1.2B. Management attributed the decline to lower average selling prices, the Model 3 changeover at Fremont, Gigafactory Berlin disruptions from the Red Sea conflict and an arson attack, the Cybertruck ramp, and higher operating expenses tied to AI and R&D.
GAAP net income attributable to common stockholders fell 55% to $1.1Bb, with diluted EPS of $0.34 (non-GAAP $0.45). Cash generation was the most pressing concern. Operating cash flow was only $0.2B, and free cash flow was negative $2.5B, driven by a $2.7B inventory build (inventory rose to $16.0B, with days of supply at 28 versus 15 in Q4 2023) and $2.8B of capital expenditures, including about $1.0B for AI infrastructure.
Cash, cash equivalents and investments declined $2.2B sequentially to $26.9Bc. Trailing twelve-month free cash flow fell to $1.4B from $5.8B a year earlier. Forward guidance was notably cautious.
Management said 2024 vehicle volume growth may be 'notably lower' than in 2023, and it pulled forward the launch of new, more affordable models ahead of the previously communicated second-half 2025 start of production, acknowledging this may yield less cost reduction than previously expected. Management also emphasized autonomy (FSD Supervised V12, lower FSD pricing) and energy storage, which it expects to outpace automotive growth in 2024. The filing's bright spots include a record 4.1 GWh of energy storage deployments, a 140%d year-over-year increase in Energy Generation and Storage gross profit, and continued sequential declines in COGS per unit excluding Cybertruck and unscheduled downtime.
02—Key points
Key Highlights
- Revenue declined 9% YoY to $21.3B, with total automotive revenue down 13% to $17.4B, while Energy Generation and Storage revenue rose 7% to $1.6B and Services and Other grew 25% to $2.3B.
- GAAP operating margin fell to 5.5% from 11.4% a year earlier; GAAP gross margin was 17.4%, down 199 bps, and operating expenses rose 37% YoY to $2.5B, driven partly by AI, cell and R&D spending.
- Free cash flow was negative $2.5B in Q1 (operating cash flow of $0.2B less $2.8B capex), reflecting a $2.7B inventory increase; cash and investments fell $2.2B sequentially to $26.9B.
- Vehicle deliveries fell 9% YoY to 386,810, with Model 3/Y deliveries down 10%; global inventory days of supply rose to 28 from 15 in the prior quarter.
- Management expects 2024 vehicle volume growth to be notably lower than 2023 growth, and it accelerated launch timing for new, more affordable models, which may mean less cost reduction than previously expected.
- Energy storage deployments reached a record 4.1 GWh, and Energy Generation and Storage gross profit rose about 140% YoY, which management describes as its highest-margin business.
- Adjusted EBITDA was $3.4B (15.9% margin) versus $4.3B (18.3%) a year earlier; GAAP diluted EPS was $0.34 and non-GAAP diluted EPS was $0.45, both down roughly 47–53% YoY.
03—Questions
Frequently Asked Questions
Why did Tesla's profitability decline so sharply in Q1 2024?
Management cited lower average selling prices (including mix), fewer deliveries tied to the Model 3 changeover in Fremont and Gigafactory Berlin disruptions (Red Sea shipping diversions and an arson attack), the cost of the Cybertruck production ramp, and higher operating expenses driven by AI, cell and other R&D projects. Partial offsets included lower cost per vehicle (raw materials, freight, duties), growth in energy gross profit including IRA credit benefits, and higher FSD revenue recognition from the Autopark release.
Why was free cash flow negative in Q1 2024, and how much cash does Tesla have?
Free cash flow was negative $2.5B, driven mainly by a $2.7B inventory increase (inventory rose to $16.0B) and about $1.0B of AI infrastructure capex within total capex of $2.8B. Operating cash flow was only $0.2B. Cash, cash equivalents and investments ended the quarter at $26.9B, down $2.2B sequentially.
What does the filing say about 2024 vehicle growth and new products?
Tesla said 2024 vehicle volume growth may be notably lower than 2023's growth as teams work on the next-generation vehicle and other products. It has accelerated the launch of new, more affordable models ahead of the previously planned second-half 2025 start of production, using aspects of both its current and next-generation platforms on existing manufacturing lines. This may result in less cost reduction than previously expected, but it lets Tesla grow volume more capital-efficiently, with current expected maximum capacity of close to three million vehicles.
Is the Energy business a bright spot, and what is its outlook?
Yes. Energy storage deployments hit a record 4.1 GWh, and Energy Generation and Storage revenue and gross profit reached all-time highs, with gross profit up about 140% YoY on Megapack growth, partly offset by lower solar deployments. Tesla expects energy storage deployment and revenue growth in 2024 to outpace the automotive business, and it says the second general assembly line at its Lathrop Megafactory is commissioned.
How should investors interpret the non-GAAP figures in this update?
Non-GAAP net income excludes stock-based compensation (net of tax), giving $1.5B versus GAAP net income of $1.1B, and non-GAAP diluted EPS of $0.45 versus GAAP $0.34. Adjusted EBITDA of $3.4B adds back interest, taxes, D&A and stock-based compensation. Tesla notes these measures supplement GAAP results. Investors should weigh GAAP results alongside them, particularly because stock-based compensation is a real cost and the filing discloses GAAP operating income of $1.2B and operating cash flow of only $0.2B.
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