-
Starting in the US where Tesla revealed the biggest slump in earnings
-
in more than a decade
-
as the road gets increasingly rocky for the electric car industry.
-
Tesla made profits of $1.1 billion in the first three months of the year.
-
That's a fall of 55% on this time.
-
Last year revenues were 9% lower
-
and both numbers were worse than investors had been expecting.
-
But Tesla shares, well, they've taken a real pounding this year.
-
They actually jumped by nearly 12% in after hours trade
-
after the company promised quicker progress on new more affordable models.
-
Erin Delmore has been looking at the numbers.
-
It's been a rocky road for Tesla this year.
-
Higher interest rates are taking a bite out of consumer purchasing power
-
and pushing big purchases out of reach.
-
Competition with China, especially rival electric vehicle maker BYD, is heating up.
-
Sales have been falling and so is Tesla's stock.
-
It's down more than 40% this year.
-
The model Y.
-
The company's been cutting prices and announced layoffs.
-
And then on Tuesday, the company reported its first quarter earnings,
-
missing expectations on earnings and revenue.
-
And the company is anticipating lower deliveries this year,
-
compared to 2023.
-
But investors have one bright spot to look to,
-
Tesla announced it's speeding up the launch of a lower priced vehicle.
-
More affordable models could be a boon for cash strapped US consumers
-
and a hit in big competitive markets worldwide like China and India.
-
Erin Delmore there.
-
Well, I also spoke to Seth Goldstein, who's a strategist
-
at the investment manager Morning Star
-
where he chairs their committee on electric vehicles.
-
He gave us his reaction to the results from Tesla.
-
Well, we knew that deliveries were going to fall.
-
And so, we're likely going to see a revenue decline
-
and a larger profit decline due to the challenges in the quarter.
-
And not only just lower sales but the production issues as well,
-
as ramping up new vehicles like the cyber truck
-
that we're going to weigh on profits.
-
But looking at the quarter, you know, the bad news is already largely known.
-
So now, the question for investors was what was Tesla's strategy going forward.
-
Were they going to cancel the affordable vehicle as was rumored in the media?
-
Or were they going to continue it?
-
And Tesla said they're going to accelerate it.
-
Plus, full self-driving is on track to start generating more and more revenue.
-
So looking forward, I think the bad news was largely priced into the stock.
-
Tesla confirmed their strategy
-
and that's why we saw the stock rise in after hours,
-
despite results coming in below consensus.
-
Now, of course, what's going on with Tesla
-
reflects what's going on in the global economy
-
and things have changed radically
-
sincethis firm first came to our attention
-
and was a disruptor within the car industry.
-
Now, every big car maker in the world is getting its electric vehicles out there.
-
So, just talk us through the future for Tesla as the competition gets tougher.
-
Well, now Tesla is no longer the first mover.
-
They don't have that advantage of being the incumbit in the market.
-
Now they have to make the case to consumers of why you should buy a Tesla
-
versus another vehicle,
-
especially Tesla was one of the first long range electric vehicles,
-
versus early EVs had a much shorter range,
-
usually half the range of a Tesla or less.
-
And so, that was pretty easy for consumers
-
who wanted the longer range to choose a Tesla.
-
Now Tesla to rely on things like the full self-driving,
-
rely on the performance specs, the battery life,
-
offering consumers more infotainment while they charge,
-
those sorts of ancillary products and services
-
as a reason to buy Tesla over another EV brand
-
because the EV market,
-
especially in the luxury space where Tesla currently operates,
-
is largely saturated with new players and incumbents.
-
And so, Tesla no longer enjoys having that sort of market dominance
-
that they once had.
-
And just quickly Seth, are you concerned at all
-
about Elon Musk still being in charge of Tesla as the boss, as CEO?
-
There was a lot conversation some time ago when he bought X and the wrangling
-
and the legal wranglings over X
-
that he was not focused on Tesla enough.
-
He was busy with other things.
-
Well, Elon confirmed on the earnings call
-
that he spends the majority of his time at Tesla.
-
And I think we've seen a very strong management team from Tesla
-
that includes Tom Zoo, who's the effective COO,
-
who makes a lot of the pricing and manufacturing decisions.
-
And so, I think Elon is more than capable of continuing to be the CEO of Tesla
-
as well as meet his other business ventures.
-
And you know, with X, he's taking more of a technology role.
-
He's not the CEO of that company.
-
So, I think he'll be able to run Tesla
-
and Tesla will still be able to meet their goals.
-
Interesting, Seth Goldstein there from Morning Star.
-
Well, Tesla is the first of the so-called Magnific 7
-
- that's the tech companies that dominate US markets
-
to report quarterly earnings.
-
Today, we'll be hearing from Facebook and Instagram owner Meta.
-
Thursday, we have results from Google owner alphabet as well as Microsoft.
-
Over the past week or so,
-
around a trillion dollars has been wiped off the value of big tech companies.
-
But on Tuesday, US markets were higher
-
with the tech heavy NASDAQ index up 1.6%.
-
So maybe, some optimism is coming.
