Tesla is expected to announce Tuesday that it made less money in the first three months of the year due to its tepid car sales, deepening investors’ concerns that the Elon Musk-led company is losing money. ground in the electric vehicle market.
A profit decline was seen as inevitable after Tesla said this month that its first-quarter sales fell 8.5% from a year earlier, and after the company announced plans to lay off workers more than 10% of its employees worldwide, or around 14,000 people. The job cuts were interpreted as a sign that Tesla was struggling to align its costs with falling revenue.
A year ago, in the first quarter of 2023, Tesla reported earning $2.5 billion and had one of the best profit margins in the industry. But the company has been forced to cut prices, including in a new round of negotiations last week, reducing the amount it makes on each car it sells. For a while, this strategy seemed to help boost the company’s sales, but Tesla now appears to be struggling to attract buyers, even with lower prices.
Tesla investors are increasingly concerned that its declining sales and profits are a symptom of larger problems, which could indicate the company’s inability to respond effectively to increased competition from established automakers and new Chinese car manufacturers.
Mr. Musk recently signaled that Tesla would focus on driving technology and a vehicle he calls the Robotaxi, dismaying investors who expected the company to develop a new, cheaper model that could make cars affordable electric vehicles to a wider range of customers and people in more countries.
Investors are hoping Mr. Musk will answer questions about Tesla’s strategy during his conference call Tuesday at 5:30 p.m. But Mr. Musk has often disappointed such expectations in the past, and he appeared unfazed by the 40% drop in Tesla’s stock price this year.
He appeared to be joking about Tesla’s stock price when reacting to Nividia’s stock drop last week, which wiped more than $200 billion off the chipmaker’s value. “Rookie numbers,” Mr. Musk said on X, the social media platform he owns.
Mr. Musk defended Tesla’s price cuts, saying that all automakers adjust their prices, but usually through dealer incentives and other measures that are not as visible to buyers. Tesla sells cars directly to customers online rather than through franchise dealerships.
“Tesla prices must change frequently in order to match production with demand,” Mr. Musk said.
Mr Musk on Monday postponed a planned trip to India, where he was due to meet Prime Minister Narendra Modi and announce plans for a factory, citing “very onerous obligations for Tesla”.
While the delay could disappoint investors who had hoped India could become a new source of growth, it could also provide reassurance that Mr. Musk is tackling Tesla’s problems more urgently. The company’s models are unlikely to be sold in large numbers in India, where most car buyers prefer smaller, more affordable vehicles.
Tesla’s newest vehicle is the Cybertruck, a pickup truck that the company began producing last year. But the company has only sold about 4,000, according to information revealed in a recall last week, suggesting it won’t be a source of significant growth.
The autonomous taxi is considered a long-term project, in part because even the most advanced autonomous systems available today sometimes make glaring errors. Additionally, federal and state regulators will need to sign off before Tesla can put such taxis on the road. Tesla does not yet have a license to test driverless vehicles in California, where it is expected to develop Robotaxi software.
“Elon Musk has been promising Robotaxis since 2016,” said Jan Becker, chief executive of Apex.AI, a company that provides software used by self-driving systems. “I don’t see enough evidence that Tesla is launching a Robotaxi, at least in the short term.”
Mr. Musk has done little to allay investors’ concerns about his plans. “I’m not really betting on the company, but going to the wall for autonomy is a blindingly obvious decision,” he said. “Everything else looks like variations on a horse-drawn carriage.”
Attention to Tuesday’s earnings report was unusually intense after a series of recent events that raised questions about Tesla’s direction and Mr. Musk’s leadership.
Tesla’s board last week disappointed investors who hoped it would do more to get Mr. Musk to focus on the auto sector and spend less time on X, where his polarizing comments and affinity for right-wing conspiracy theories have alienated many potential customers.
The board took steps to restore $47 billion in compensation for Mr. Musk that had been overturned by a Delaware court. The board also said it would ask shareholders to approve moving Tesla’s headquarters to Texas, a change requested by Mr. Musk the day the Delaware court struck down his compensation plan in January at on the grounds that it was excessive and that shareholders were not properly paid. informed when they approved it in 2018.
Robyn Denholm, chairman of Tesla’s board of directors, did not acknowledge Tesla’s problems in a statement. posts to investors. She said 2023 was “just a typical year of triumphs and achievements”.
