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Tesla earnings report could raise concerns about its strategy| GuyWhoKnowsThings


Tesla is expected to report Tuesday that it made less money in the first three months of the year due to its tepid auto sales, reinforcing concerns among investors that the Elon Musk-led company is losing ground in the vehicle market. electrical.

A drop in profits was considered inevitable after Tesla said this month that sales in the first quarter fell 8.5 percent from a year earlier, and after the company announced plans to fire more than 10 percent of its employees worldwide, or about 14,000 people. The job cuts were interpreted as a sign that Tesla was struggling to align 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 last week, reducing the amount it earns for each car it sells. For a time, that strategy seemed to help boost the company's sales, but now Tesla 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 bigger problemspossibly pointing to the company's inability to respond effectively to increased competition from established automakers and new automakers. Porcelain.

Musk has recently signaled that Tesla will focus on self-driving technology and a vehicle it calls Robotaxi, dismaying investors who had hoped the company would develop a new, lower-priced model that could make electric cars affordable. affordable for a wider range of customers. and people in more countries.

Investors expect Musk to answer questions about Tesla's strategy when he holds a conference call at 5:30 p.m. on Tuesday. But Musk has often disappointed such expectations in the past and seemed unfazed by the 40 percent drop in Tesla's share price this year.

He appeared to joke about Tesla's stock price when reacting to a drop in Nividia shares last week that wiped more than $200 billion off the chipmaker's value. “Rookie numbers,” Musk said on X, the social media platform he owns.

Musk defended Tesla's price cuts, saying that all automakers adjust prices, but usually through incentives for dealers and other measures that are not as visible to buyers. Tesla sells cars directly to customers online rather than through franchised dealerships.

“Tesla prices must change frequently to match production to demand,” Musk said.

Musk postponed a planned trip to India on Monday, where he was expected to meet Prime Minister Narendra Modi and announce plans for a factory, citing “very heavy Tesla obligations.”

While the postponement may disappoint investors who had hoped India could be a new source of growth, it could also provide reassurance that Musk is addressing Tesla's problems with greater urgency. The company's models are unlikely to sell in large numbers in India, where most car buyers prefer smaller, more affordable vehicles.

Tesla's newest vehicle is the Cybertruck, a pickup truck the company began producing last year. But the company has sold only about 4,000, according to information that emerged in a recall last week, suggesting it won't be a significant source of growth.

The autonomous taxi is considered a long shot, in part because even the most advanced autonomous systems available today sometimes make glaring mistakes. Additionally, federal and state regulators will have to approve before Tesla can put such taxis on the roads. Tesla is not yet licensed to test self-driving vehicles in California, where it is expected to develop the Robotaxi software.

“Elon Musk has been promising Robotaxis since 2016,” said Jan Becker, CEO of Apex.AI, a company that provides software used by autonomous driving systems. “I don't see enough evidence of Tesla launching a Robotaxi, at least in the short term.”

Musk has done little to allay investor concerns about his plans. “It's not exactly going all-in on the enterprise, but going all-in on autonomy is a blindingly obvious move,” he said. “Everything else is like variations of a horse-drawn carriage.”

The focus on Tuesday's earnings report was unusually intense after a series of recent events that raised questions about Tesla's direction and Musk's leadership.

Last week Tesla Board of Directors disappointed investors who had hoped he would do more to make Musk focus on the auto business and spend less time on X, where his polarizing comments and affinity for right-wing conspiracy theories have alienated many potential customers.

The board moved to restore a $47 billion pay package for Musk that had been overturned by a Delaware court. The board also said it would ask shareholders to approve moving Tesla's corporate headquarters to Texas, a change Musk requested the day the Delaware court struck down his pay package in January on the grounds that it was excessive and that shareholders They were not properly informed. he reported when they approved it in 2018.

Robyn Denholm, Tesla's chairman, did not acknowledge Tesla's problems in a message to investors. He said 2023 was “just a typical year of triumphs and achievements.”


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