Tesla Says It Will Start Making More Affordable Models Soon

Tesla's first-quarter net income plummeted 55%, but its stock price surged in after-hours trading Tuesday as the company said it would move up production of new, more affordable vehicles. The Austin, Texas, company said it made $1.13 billion from January through March compared with $2.51 billion in the same period a year ago, the AP reports. The year-on-year drop was the biggest since 2012, reports CNBC.

• Investors and analysts were looking to the earnings release for some sign that Tesla will move to end a stock slide this year and reverse the sales decline. The company did that in a letter to investors Tuesday, saying that production of smaller, more affordable models will start in the second half of next year, ahead of previous guidance.

• The smaller models, which apparently include the Model 2 small car for the masses that is expected to cost around $25,000, will use new generation vehicle underpinnings and some features of current models. The company said it would be built on the same manufacturing lines as current vehicles. Previously there had been reports of a new factory in Mexico.
• The company also appears to be counting on a vehicle built to be a fully autonomous robotaxi as the catalyst for future earnings growth. CEO Elon Musk has said the robotaxi will be unveiled on Aug. 8.
• Shares of Tesla rose nearly 8% in trading after Tuesday's closing bell, but they are down more than 40% this year. The S&P 500 index is up about 5%.
• Tesla reported that first-quarter revenue was $21.3 billion, down 9% from last year as worldwide sales dropped nearly 9% due to increased competition and slowing demand for electric vehicles. Tesla also blamed an arson attack at its German plant and factory downtime as it switched factories to an updated version of the Model 3 sedan. The company's gross profit margin, the percentage of revenue it gets to keep after expenses, fell once again to 17.4%.

(More Tesla stories.)