Tesla investors, still digesting a 43% year-to-date share price decline, are bracing for possibly unimpressive first-quarter financial results and a shift in priorities for CEO Elon Musk, who is making more moves i go “Ball to the wall for autonomy.”
Tesla is expected to report earnings after the market closes on Tuesday. The company’s earnings call is scheduled for 5:30 p.m. ET.
Shares of Tesla rose Tuesday morning more than 2% ahead of earnings, a brief rosy sign amid an otherwise downtrend that has accelerated since early March. The share price drop comes as Musk pushes forward with a renewed focus on automated driving on two fronts: selling more customers on the advanced driver-assistance system known as “Full Self-Driving,” or (FSD), and a effort to bring a robotaxi to market.
Over the weekend, Tesla dropped the price of its advanced Full Self-Driving (FSD) driver assistance system to $8,000, down from $12,000. This price cut is on top of last week’s FSD monthly subscription drop to $99, down from $199. The push to get FSD into more cars could be an effort to gather more data as Tesla works to boost the neural networks that will power full-scale autonomy. FSD today can handle many city and highway driving tasks, but still requires a human to stay alert with hands on the wheel in case the system calls for a takeover.
Tesla faces limited profits as it makes a major and expensive bet on self-driving technology. Last week, Tesla laid off 10 percent of its staff in a move to cut costs in preparation for the company’s “next phase of growth,” according to an email Musk sent to all employees.
Earlier this month, Musk suddenly announced at X that Tesla is halting development of its $25,000 electric vehicle in favor of a robot taxi he promised to unveil in August. Sources inside Tesla confirmed to TechCrunch that they had no prior warning from Musk about this sudden change, and that the internal restructuring reflects a new ethos that puts robotaxi development front and center.
All this is happening as Tesla zigzags on its EV pricing strategy.
Last week, Tesla withdrew price discounts on its stock EVs, but over the weekend it slashed prices on the Model 3 and Model Y by up to $2,000 in the US, China and Germany. As we saw in the first quarter of 2023, these price cuts are impacting Tesla’s revenue and margins.
The company will have to convince investors that its shift to prioritizing autonomous vehicles is a silver lining in the cloud of shrinking margins and not just smoke and mirrors.
What to Expect in Tesla’s Q1 2024 Earnings
Tesla’s lower first-quarter delivery numbers combined with price cuts are ingredients for a smaller profit pie. And analysts seem to agree.
Analysts poll by Yahoo Finance they expect earnings of $0.51 per share on revenue of $22.15 billion. Recall that Tesla generated revenue of $25.17 billion 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 it delivered in the final quarter of 2023. It’s worth noting that this wasn’t just a quarter over the quarter. Tesla delivered fewer cars from the first quarter of 2023 – the first year-over-year sales decline in three years.
Tesla’s fourth-quarter results show a company already facing shrinking margins due to its price-cutting strategy, the rising cost of ramping up Cybertruck production and other R&D expenses.
The automaker reported net income, on a GAAP basis, of $7.9 billion in the fourth quarter — a big number driven by a one-time 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 operating income of $2.06 billion in the fourth quarter, 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 its profit pie from shrinking into a profit muffin.
Since Tesla reported its first-quarter 2024 production and delivery numbers, the company has continued to pull various financial levers aimed at attracting new buyers and motivating existing customers to pay for FSD — all while lowering costs and maintaining the profit margins.
Those competing goals combined with Musk’s status in “CEO wartime mode” are sure to make the first-quarter earnings call entertaining. Beyond that potential theater, there are pressing long-term questions about how Tesla delivers on autonomy and whether it will be enough to convince investors that it can still lead and innovate.
