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. Photo courtesy of Tesla

Tesla’s first-quarter net income plummeted 55 percent, but its stock price surged in after-hours trading Tuesday as the company said it would accelerate 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.

Investors and analysts were looking for some sign that Tesla will take steps to stem its stock's slide this year and grow sales. The company did that in a letter to investors Tuesday, saying that production of smaller, more affordable models will start ahead of previous guidance.

The smaller models, which apparently include the Model 2 small car 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 its current products.

On a conference call with analysts, CEO Elon Musk said he expects production to start in the second half of next year “if not late this year.”

New factories or massive new production lines won't be needed for the new vehicles, Musk said.

“This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times,” the investor letter said.

But Musk gave few specifics on just what the new vehicles will be and whether they would be variants of current models. “I think we’ve said all we will on that front,” he told an analyst.

He did say that he expects Tesla to sell more vehicles this year than last year's 1.8 million.

The company also appears to be counting on a vehicle built to be a fully autonomous robotaxi as the catalyst for future earnings growth. Musk has said the robotaxi will be unveiled on Aug. 8.

Shares of Tesla rose 11 percent in trading after Tuesday’s closing bell, but they are down more than 40 percent this year. The S&P 500 index is up about 5 percent for the year.

Morningstar analyst Seth Goldstein said the company gave guidance about its future that was clearer than in the past, allaying investor concerns about production of the Model 2 and future growth. “I think for now we're likely to see the stock stabilize," he said. “I think Tesla provided an outlook today that can make investors feel more assured that management is righting the ship.”

But if sales fall again in the second quarter, the guidance will go out the window and concerns will return, he said.

Tesla reported that first-quarter revenue was $21.3 billion, down 9 percent from last year as worldwide sales dropped nearly 9 percent due to increased competition and slowing demand for electric vehicles.

Excluding one-time items such as stock-based compensation, Tesla made 45 cents per share, falling short of analyst estimates of 49 cents, according to FactSet.

The company’s gross profit margin, the percentage of revenue it gets to keep after expenses, fell once again to 17.4 percent. A year ago it was 19.3 percent, and it peaked at 29.1 percent in the first quarter of 2022.

Over the weekend, Tesla lopped $2,000 off the price of the Models Y, S and X in the U.S. and reportedly made cuts in other countries including China as global electric vehicle sales growth slowed. It also slashed the cost of “Full Self Driving” by one third to $8,000.

Tesla also announced last week that it would cut 10 percent of its 140,000 employees, and Chief Financial Officer Vaibhav Taneja said Tuesday the cuts will be across the board. Growth companies build up duplication that needs to be pruned like a tree to continue growing, he said.

Musk has been touting the robotaxi as a growth catalyst for Tesla since the hardware for it went on sale late in 2015.

In 2019, Musk promised a fleet of autonomous robotaxis by 2020 that would bring income to Tesla owners and make their car values appreciate. Instead, they've declined with price cuts, as the autonomous robotaxis have been delayed year after year while being tested by owners as the company gathers road data for its computers.

Neither Musk nor other Tesla executives on Tuesday's call would specify when they expect Tesla vehicles to drive themselves as well as humans do. Instead, Musk touted the latest version of Tesla’s autonomous driving software — which the company misleadingly brands as “Full Self Driving” despite the fact that it still requires human supervision — and said that “it’s only a matter of time before we exceed the reliability of humans, and not much time at that.”

It didn’t take the Tesla CEO long to begin expounding on the possibility of turning on self-driving capabilities for millions of Tesla vehicles at once, although again without estimating when that might actually occur. He went on to insist that “if somebody doesn’t believe that Tesla is going to solve autonomy, I think they should not be an investor in the company.”

Early last year the National Highway Traffic Safety Administration made Tesla recall its “Full Self-Driving” system because it can misbehave around intersections and doesn’t always follow speed limits. Tesla's less-sophisticated Autopilot system also was recalled to bolster its driver monitoring system.

Some experts don't think any system that relies solely on cameras like Tesla's can ever reach full autonomy.

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CultureMap Emails are Awesome

Podcast: Houston bio-based materials founder rebrands, evolves future-focused sustainability startup

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At first, Zimri T. Hinshaw just wanted to design a sustainable, vegan jacket inspired by bikers he saw in Tokyo. Now, he's running a bio-based materials company with two product lines and is ready to disrupt the fashion and automotive industries.

Hinshaw founded Rheom Materials (née Bucha Bio) in 2020, but a lot has changed since then. He moved the company from New York to Houston, built out a facility in Houston's East End Maker Hub, and rebranded to reflect the company's newest phase and extended product lines, deriving from dozens of different ingredients, including algae, seaweed, corn, other fruits and vegetables, and more.

"As a company, we pivoted our technology from growing kombucha sheets to grinding up bacteria nanocellulose from kombucha into our products and then we moved away from that entirely," Hinshaw says on the Houston Innovators Podcast. "Today, we're designing different materials that are more sustainable, and the inputs are varied."

Now, in addition to Rheom's leather-like alternative, Shorai, the company has a plastic-like material, Benree, that's 100 percent bio based.

"The scope of what we were doing — both on what raw materials we were using and what we were creating just kept expanding and growing," Hinshaw says.

With that major evolution past just kombucha-based textiles, it was time for a new name, ideated by the company's technical team. "Rheom" is the combination of "rheology" — the study of how polymers flow — and "form."

Rheom has also built a state-of-the-art chemicals testing lab at its new facility after moving into it early last year.

"We've got a ton of capabilities now — and we've been growing those since the beginning," Hinshaw says. "Now we have all this testing equipment — things that pull materials apart, things that test the flexibility of materials."

Next up, Rheom, which is backed by Houston-based New Climate Ventures, among other VCs, will raise a series A funding round to continue supporting its growth.

———

This article originally ran on InnovationMap.

Tesla unveils its robotaxi, plans to bring autonomous driving tech to other models in 2025

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Texas-based Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, though fans of the electric vehicle maker will have to wait until at least 2026 before they are available.

CEO Elon Musk pulled up to a stage at the Warner Bros. studio lot in one of the company's “Cybercabs," telling the crowd that the sleek, AI-powered vehicles don't have steering wheels or pedals. He also expressed confidence in the progress the company has made on autonomous driving technology that makes it possible for vehicles to drive without human intervention.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

“We’ll move from supervised Full Self-Driving to unsupervised Full Self-Driving. where you can fall asleep and wake up at your destination,” he said. "It’s going to be a glorious future.”

Tesla expects the Cybercabs to cost under $30,000, Musk said. He estimated that the vehicles would become available in 2026, then added “before 2027.”

The company also expects to make the Full Self-Driving technology available on its popular Model 3 and Model Y vehicles in Texas and California next year.

“If they’re going to eventually get to robotaxis, they first need to have success with the unsupervised FSD at the current lineup,” said Seth Goldstein, equity strategist at Morningstar Research. “Tonight’s event showed that they're ready to take that step forward.”

When Tesla will actually take that step, however, has led to more than a little anxiety for investors who see other automakers deploying similar technology right now. Shares of Tesla Inc. tumbled 9% at the opening bell Friday.

Waymo, the autonomous vehicle unit of Alphabet Inc., is carrying passengers in vehicles without human safety drivers in Phoenix and other areas. General Motors’ Cruise self-driving unit had been running robotaxis in San Francisco until a crash last year involving one of its vehicles.

Also, Aurora Innovation said it will start hauling freight in fully autonomous semis on Texas freeways by year’s end. Another autonomous semi company, Gatik, plans to haul freight autonomously by the end of 2025.

“Tesla yet again claimed it is a year or two away from actual automated driving -- just as the company has been claiming for a decade. Indeed, Tesla’s whole event had a 2014 vibe, except that in 2014 there were no automated vehicles actually deployed on public roads,” Bryant Walker Smith, a University of South Carolina law professor who studies automated vehicles, told The Associated Press in an email. “Now there are real AVs carrying real people on real roads, but none of those vehicles are Teslas. Tonight did not change this reality; it only made the irony more glaring.”

Tesla had 20 or so Cybercabs on hand and offered event attendees the opportunity to take rides inside the movie studio lot — not on Los Angeles' roads.

At the presentation, which was dubbed “We, Robot” and was streamed live on Tesla’s website and X, Musk also revealed a sleek minibus-looking vehicle that, like the Cybercab, would be self-driving and can carry up to 20 passengers.

The company also trotted out several of its black and white Optimus humanoid robots, which walked a few feet from the attendees before showing off dance moves in a futuristic-looking gazebo.

Musk estimated that the robots would cost between $28,000-$30,000 and would be able to babysit, mow lawns, fetch groceries, among other tasks.

“Whatever you can think of, it will do,” he said.

The unveiling of the Cybercab comes as Musk tries to persuade investors that his company is more about artificial intelligence and robotics as it labors to sell its core products, an aging lineup of electric vehicles.

Tesla’s model lineup is struggling and isn’t likely to be refreshed until late next year at the earliest, TD Cowen analyst Jeff Osborne wrote in a research note last week.

Osborne also noted that, in TD Cowen’s view, the “politicization of Elon” is tarnishing the Tesla brand among Democrat buyers in the U.S.

Musk has endorsed Republican presidential candidate Donald Trump and has pushed many conservative causes. Last weekend he joined Trump at a Pennsylvania rally.

Musk has been saying for more than five years that a fleet of robotaxis is near, allowing Tesla owners to make money by having their cars carry passengers while they’re not in use by the owners. Musk said that Tesla owners will be able to put their cars into service on a company robotaxi network.

But he has acknowledged that past predictions for the use of autonomous driving proved too optimistic. In 2019, he promised the fleet of autonomous vehicles by the end of 2020.

The announcement comes as U.S. safety regulators are investigating Full Self Driving and Autopilot based on evidence that it has a weak system for making sure human drivers pay attention.

In addition, the U.S. National Highway Traffic Safety Administration forced Tesla to recall Full Self-Driving in February because it allowed speeding and violated other traffic laws, especially near intersections. Tesla was to fix the problems with an online software update.

Last April in Snohomish County, Washington, near Seattle, a Tesla using Full Self-Driving hit and killed a motorcyclist, authorities said. The Tesla driver told authorities that he was using the system while looking at his phone when the car rear-ended the motorcyclist. The motorcyclist was pronounced dead at the scene, authorities said.

NHTSA says it’s evaluating information on the fatal crash from Tesla and law enforcement officials.

The Justice Department also has sought information from Tesla about Full Self-Driving and Autopilot, as well as other items.