Tesla reported its first quarter earnings during an incredibly shaky moment for the company in which sales numbers and the stock price have both fallen. Against this backdrop, Tesla reported $1.1 billion in net income on $21 billion in revenue, down 9 percent from $23.3 billion the same time last year.

The company’s profits, once the envy of the auto industry, are at their lowest in six years thanks to rampant price cutting and slowing demand. Earlier this week, the company approved its latest price cuts for the US, China, and Germany — all major markets for the EV maker.

Tesla’s Q1 operating margins are 5.5 percent, down from 11.4 percent in Q1 2023. In a call with investors, the company’s CEO, Elon Musk, blamed an industrywide shift from battery-electric vehicles to hybrids.

“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 full of red ink. Total automotive revenues are down 13 percent year over year. Operating expenses are down 37 percent. Net income attributable to common stockholders has slid 55 percent. The company has literally negative free cash flow of $2.5 billion, meaning there is no cash left over after meeting Tesla’s operating, capital, and adjusting for noncash expenses.

The company’s vehicle inventory rose to 28 days from last quarter’s 15 days. That’s a sharp increase and a sign of Tesla’s struggles with cooling demand.

Musk faced pointed questions from investors on these numbers as well as recent reports that the company has paused development of a new low-cost “Model 2” electric vehicle that was expected to come in at $25,000. Musk reportedly delayed the project, preferring to go “balls to the wall” on Tesla’s forthcoming robotaxi, which is expected to debut in August. Investors had pinned their hopes on the Model 2 to spur the company’s next wave of growth.

In the shareholder note, Tesla made no direct reference to the Model 2 but said it’s focused on leveraging 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 states. “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 largely dodged questions for more specifics on affordable EVs, promising to reveal more details later this year during an event to reveal the company’s robotaxi. He did speak at length about a variety of other topics, including autonomy, batteries, and even aliens.

Earlier this year, Tesla reported lackluster sales numbers in a sign that cooling demand for EVs and rising competition were taking their toll on the company. Tesla said it delivered 386,810 vehicles in the first three months of the year, an 8.6 percent drop compared to the first quarter of 2023. The company had earlier predicted slowed 2024 growth as it prepared to begin new vehicle production in 2025.

Soon after, the company said it would lay off 10 percent of its global workforce, or about 14,000 people. Bloomberg reported that the layoffs could ultimately reach 20 percent of the company’s employees.

Related: