The initiative comes as the demand for vehicles slumps and cuts into the EV maker’s revenue.

Faced with falling global sales and a tumbling stock price, Tesla has slashed prices again on some of its electric vehicles and its full self-driving system. Tesla’s first- quarter net income plummeted 55%. CHRIS CARLSON — THE ASSOCIATED PRESS.

By DANA HULL AND ED LUDLOW | BLOOMBERG

Tesla is accelerating the launch of more affordable models in a bid to arrest a deterioration in its profit margins and sales.

The electric-vehicle maker plans to start production on the cheaper cars before the second half of 2025, when it had previously pledged to begin making them. The Elon Musk-led company has been coping with a sales slump as EV demand falters.

Tesla’s first-quarter net income plummeted 55% as falling global sales and price cuts sliced into the electric vehicle maker’s revenue and profit margins.

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. Revenue fell 9% to $21.3 billion, according to a statement Tuesday, in line with its first year-over-year drop in deliveries since 2020. That was still short of the $22.3 billion analysts expected.

Tesla’s stock has tumbled 42% this year through Tuesday’s close, the worst performance in the S&P 500 Index.

Tesla also kept its near-term growth expectations in check, saying deliveries may be lower than last year. “In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next generation vehicle and other products,” it said.

The EV maker’s strategy has been muddled for much of 2024. It’s spent the last year slashing prices across its lineup in an effort to boost sales volume, only to find demand for its vehicles slowed.

Adding to Tesla’s woes has been Musk’s abrupt decision to go “balls to the wall” on a dedicated robotaxi for which the company lacks regulatory approval and possibly the technological capability. Investors had expected the company to instead focus on a new,

$25,000 model that Musk had promised to go into production before the end of next year.

Tesla gave no timeline, but said it’s continuing to pursue a new module-based “unboxed” manufacturing process for its promised robotaxi model. In a reflection of leaner times, Tesla noted those new models will be built on existing manufacturing lines at current factories to maximize capacity and grow “prudently.”

It wasn’t immediately clear if Tesla’s “more affordable models” pledge was a reference to the long-discussed low-cost car, sometimes dubbed the Model 2. Many investors see that as way to help generate new enthusiasm around its lineup and draw new customers.

“The affordable vehicle is still planned to go into production,” said Seth Goldstein, an equities strategist at Morningstar.

The carmaker remains the dominant EV maker in the US market, but its profits have been under pressure for several quarters. Tesla’s automotive gross margin — a key measure of profitability — was 16.4% in the first quarter, smaller than the 17.6% Wall Street expected. That’s far from the 30% peak margin it reported at the start of 2022.

Earlier this month, Tesla initiated its largest-ever round of layoffs, cutting more than 10% of positions — though Bloomberg has reported the company may ultimately let go some 20% of its staff. Among those job cuts are 6,000 across Texas and California. The reductions include 2,688 workers in Austin and 3,332 employees across multiple sites in California, according to separate WARN notices filed in each state.

The Associated Press contributed to this report.