Tesla Inc. is expected to report on Tuesday that its profits fell in the first three months of the year due to weak car sales, raising investors' concerns that Elon Musk's company is losing ground in the electric vehicle market. There is growing concern among the
Earlier this month, Tesla announced that its first quarter sales were down 8.5% from the same period last year, and the company announced plans to lay off more than 10% of its workforce, or approximately 14,000 people, worldwide. As a result, a decline in profits seemed inevitable. The layoffs were interpreted as a sign that Tesla is struggling to meet costs to match declining revenues.
A year ago, in the first quarter of 2023, Tesla announced a profit of $2.5 billion, the highest profit margin in the industry. But the company has been forced to cut prices, including a new round last week, reducing the amount it makes per car it sells. For a while, this strategy seemed to help the company boost sales, but Tesla now appears to be struggling to attract buyers, even with lower prices.
Tesla investors have grown increasingly concerned that the company's declining sales and profits are a symptom of a larger problem, perhaps as Tesla faces increased competition from established automakers and emerging Chinese automakers. They believe that this may indicate that they are unable to respond to the situation.
Musk recently suggested that Tesla would focus on self-driving technology and vehicles it calls robotaxis, but he expected the company to develop new, lower-cost models that could make electric cars affordable to a wider range of customers. Investors were disappointed. To people in more countries.
Investors expect Musk to answer questions about Tesla's strategy during a conference call Tuesday at 5:30 p.m. But Musk has often disappointed such expectations in the past, and appears unfazed by the 40% drop in Tesla's stock price this year.
He appeared to be joking about Tesla's stock price last week when reacting to the decline in Nvidia's stock that wiped out more than $200 billion in value for the chip maker. “These are rookie numbers,” Musk said on his social media platform X.
Musk said all automakers adjust prices, but usually through dealer incentives and other means that are less visible to buyers, and explained Tesla's price cuts. defended. Tesla sells cars directly to customers online, rather than through franchise dealerships.
“Tesla's price has to change frequently to match production and demand,” he said.
Citing his “very heavy obligations to Tesla,” Musk postponed a visit to India scheduled for Monday, where he was scheduled to meet Prime Minister Narendra Modi and announce plans to build the factory.
The delay may disappoint investors who had hoped for India to be a new source of growth, but it could also provide reassurance that Musk is addressing Tesla's problems with more urgency. be. The company's models are unlikely to sell in large numbers in India, where most car buyers prefer smaller, more affordable cars.
Tesla's newest vehicle is the Cybertruck, a pickup truck that the company began producing last year. But information revealed in last week's recall suggests the company only sold about 4,000 units, suggesting it won't be a significant source of growth.
Self-driving taxis are considered difficult to achieve, as even the most advanced self-driving systems currently available sometimes make glaring mistakes. Additionally, Tesla would need approval from federal and state regulators before it can put such taxis on the road. Tesla does not yet have a license to test driverless cars in California, where it is expected to develop robotaxi software.
“Elon Musk has been promising robotaxis since 2016,” said Jan Becker, CEO of Apex AI, a company that provides software used in self-driving systems. “We don't see enough evidence that Tesla will launch a robotaxi, at least in the short term.”
Mr. Musk has done little to allay investor concerns about his plans. “I'm not betting the company completely, but going against the wall for autonomy is a tangible move,” he said. “Everything else is like a variation of a horse-drawn carriage.”
Until recently, Tesla was one of a small number of automakers making money from electric cars, but established automakers are catching up. General Motors, which also reported results on Tuesday, has resolved production difficulties in manufacturing battery packs and is ramping up production, Chief Financial Officer Paul Jacobson said on a conference call with reporters. mentioned in.
GM remains reliant on its gasoline-powered vehicle business, primarily due to a 24% jump in profits to $3 billion in the first three months of this year. But the company expects to become profitable selling electric vehicles later this year, Jacobson said.
Tesla's earnings report received an unusually high amount of attention on Tuesday following a series of recent events that have called into question the company's direction and Mr. Musk's leadership.
Last week, Tesla's board of directors disappointed investors who had hoped that Musk would do more to focus on the auto business and spend less time at Company X. Musk's biased comments and affinity for right-wing conspiracy theories hold back many possibilities. client.
The board took steps to restore Musk's $47 billion pay package that was invalidated by a Delaware court. The board also announced that it would seek stockholder approval to move Tesla's headquarters to Texas, but a Delaware court ruled in January that Tesla's pay package was excessive and shareholders were not properly treated. Mr. Musk asked for the change on the day a Delaware court terminated it because it was not. We were notified when it was approved in 2018.
Tesla board chairman Robin Denholm did not acknowledge Tesla's problems in a message to investors. She said 2023 was “just a typical year of victories and achievements.”
Neil E. Boudette Contributed to the report.