Tesla earnings week highlights EV price cuts, autonomy push – TechCrunch

Tesla earnings week highlights EV price cuts, autonomy push – TechCrunch

Image credits: Toru Hanai/Bloomberg/Getty Images

Tesla investors, still digesting a 43% year-to-date drop in stock price, are bracing for likely unimpressive first-quarter financial results and a shift in priorities for CEO Elon Musk, who is taking more steps to go “The ball to the wall for autonomy.”

Tesla is expected to report results after markets close on Tuesday. The company’s earnings conference call is scheduled for 5:30 p.m. ET.

Tesla shares rose more than 2% ahead of earnings on Tuesday morning, a brief rosy sign amid a downward trend that has otherwise accelerated since early March. The stock price decline comes as Musk continues to emphasize automated driving on two fronts: selling more customers on his advanced driver assistance system known as Full Self-Driving » or (FSD) and an ambitious effort to bring a robo-taxi. at the market.

Over the weekend, Tesla dropped the price of its Full Self-Driving (FSD) advanced driver assistance system to $8,000, down from $12,000. This price drop comes on top of last week’s drop in the FSD monthly subscription to $99, down from $199. The push to introduce FSD into more cars could be an attempt to collect more data as Tesla works to strengthen the neural networks that will enable autonomy on a larger scale. Today, FSD can perform many city and highway driving tasks, but still requires a human to remain vigilant with hands on the wheel in case the system requires a takeover.

Tesla faces shrinking profits as it banks on self-driving technology. Last week, Tesla laid off 10% of its staff in an effort to cut costs for the company’s “next phase of growth,” according to an email Musk sent to all employees.

Earlier this month, Musk abruptly announced on Sources within Tesla confirmed to TechCrunch that they had no advance notice from Musk about the sudden change and that the internal restructurings reflect a new philosophy that puts robo-taxi development at the forefront.

All of this is happening as Tesla zigzags in its electric vehicle pricing strategy.

Last week, Tesla abandoned price discounts on electric vehicle inventory, but over the weekend it slashed Model 3 and Model Y prices by up to $2,000 in the U.S., China and in Germany. As we saw in the first quarter of 2023, these price cuts are taking a toll on Tesla’s revenue and margins.

The company will need to convince investors that its shift in focus to autonomous vehicles is a glimmer of hope in the cloud of falling margins, rather than just smoke and mirrors.

What to expect from Tesla’s first quarter 2024 results

Tesla’s lower first-quarter delivery numbers, combined with price cuts, are the ingredients for reduced profits. And analysts seem to agree.

Analysts polled by Yahoo Finance expect earnings of $0.48 per share on revenue of $20.94 billion. As a reminder, Tesla generated $25.17 billion in revenue in the fourth quarter and $23.3 billion in the first quarter of 2023.

Tesla delivered 386,810 vehicles in the first quarter of 2024, down 20% from the 484,507 delivered in the last quarter of 2023. It’s worth noting that this isn’t just a quarter-to-quarter blip. ‘other. Tesla delivered fewer cars than in the first quarter of 2023 – the first year-over-year sales decline in three years.

Tesla’s fourth-quarter results show a company already struggling with shrinking profit margins due to its price-cutting strategy, rising costs to start production of its Cybertruck and others R&D expenses.

The automaker reported net income, on a GAAP basis, of $7.9 billion in the fourth quarter – a sky-high figure driven by a one-time non-cash tax benefit of $5.9 billion. The company’s operating income and profit on an adjusted basis provided a clearer picture of its financial performance.

Tesla reported fourth-quarter operating profit of $2.06 billion, down 47% from the same period last year. On an adjusted basis, the company earned $3.9 billion, down 27% from the same period last year.

The question is whether Tesla can prevent the profits pie from turning into a profits muffin.

Since Tesla released its production and delivery numbers for the first quarter of 2024, the company has continued to use various financial levers aimed at attracting new buyers and incentivizing existing customers to pay for FSD, while reducing costs and maintaining profit margins.

These opposing goals, coupled with Musk’s “wartime CEO” status, are bound to make the Q1 earnings call entertaining. Beyond this potential theater, pressing long-term questions arise about how Tesla achieves autonomy and whether that will be enough to convince investors that it can still lead and innovate.

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