Tesla Teases Self-Driving App Amid Profit Slide, Plans Uber Rival

Tesla Inc. has unveiled plans for a self-driving ride-hailing app, aiming to rival Uber, even as its quarterly profits fall sharply amid slowing demand. The tech giant teased the app alongside a report of a 9% year-over-year revenue drop.

Tesla's Future in Ride-Hailing: Integrating Autonomous Service with Tesla App, Awaiting Full Self-Driving Capabilities

Tesla has long discussed creating a ride-hailing app to compete with Uber and, more recently, Waymo. According to Electrek, there had been discussions of delivering it without self-driving technology, but it is now obvious that is what the automaker is looking for.

While Tesla has yet to accomplish unsupervised self-driving, which is required for an autonomous ride-hailing app, recent advances encourage the firm to develop that app.

On April 24, with the release of its Q1 2024 financial results, Tesla decided to tease its ride-hailing service with some screenshots.

“We have been investing in the hardware and software ecosystems necessary to achieve vehicle autonomy and a ride-hailing service. We are currently working on ride-hailing functionality that will be available in the future. We believe the Tesla software experience is best-in-class across all our products, and plan to seamlessly layer ride-hailing into the Tesla App,” Tesla stated.

This confirms that the ride-hailing service will be integrated directly into the popular Tesla app rather than as a separate app.

The carmaker did not provide a timeline for the launch of its ride-hailing service, which will depend on Tesla completing unsupervised self-driving, something it has yet to do but claims to be closer than ever with the release of its FSD v12 software.

Tesla Faces Financial Strain: Profit Dips and Strategy Shifts Amidst Sluggish EV Demand

Tesla published its first-quarter earnings at a tumultuous period, with both sales and stock prices falling. Against this backdrop, Tesla reported $1.1 billion in net profits on $21 billion in revenue, a 9 percent decrease from $23.3 billion at the same point the previous year, per The Verge.

The company's profits, once the envy of the auto industry, have fallen to their lowest level in six years due to aggressive price cuts and sluggish demand. Earlier this week, the business authorized its latest price cuts for the United States, China, and Germany, key markets for the electric vehicle maker.

Tesla's Q1 operating margins are 5.5 percent, a decrease from 11.4 percent in Q1 2023. In a conference call with investors, Elon Musk, the company's CEO, cited an industrywide shift from battery-electric to hybrid automobiles.

“EV adoption rate globally is under pressure and a lot of other auto manufacturers are pulling back on EVs and pursuing plug-in hybrids instead,” Musk said. “We believe this is not the right strategy. And electric vehicles will ultimately dominate the market.”

This quarterly report is filled with red ink. Total automobile revenues are down 13% year on year. Operating expenses decreased 37%. Net income attributable to common stockholders has fallen 55%. The company has a negative free cash flow of $2.5 billion, which means there is no cash left over after paying Tesla's operating and capital spending and accounting for non-cash costs.

The corporation increased its vehicle inventory to 28 days from 15 in the previous quarter. This is a significant rise and a sign of Tesla's difficulty with cooling demand.

Musk faced questions from investors about these figures and recent rumors that the company has halted construction of a new low-cost "Model 2" electric vehicle, which was scheduled to cost $25,000. Musk delayed the project to focus on Tesla's next robotaxi, which is set to launch in August. Investors expected the Model 2 to drive the company's next wave of expansion.

Tesla made no direct reference to Model 2 in its shareholder statement; instead, it stated that it is focusing on using its existing manufacturing footprint to "introduce new and more affordable products."

“We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025,” the company stated. These new vehicles, including more affordable models, will utilize aspects of the next-generation platform as well as aspects of our current platforms and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

Musk mostly avoided questions about further information on affordable EVs, vowing to give more details later this year at an event announcing the company's robotaxi. He spoke extensively about various other topics, including autonomy, batteries, and even aliens.

Earlier this year, Tesla announced disappointing sales figures, indicating that declining demand for EVs and increased competition were putting a toll on the company. Tesla says it delivered 386,810 vehicles in the first three months of the year, an 8.6 percent decrease from the first quarter of 2023. The business had previously forecast slowing 2024 growth as it prepared to launch new vehicle production in 2025.

Soon after, the corporation announced that it would lay off 10% of its global staff, or approximately 14,000 people. Bloomberg claimed that the layoffs might eventually affect 20% of the company's workforce.

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