Tesla’s investors and analysts will get to grill CEO Elon Musk on his robotaxi programs on Wednesday when the electric automaker declares its quarterly results after a much-hyped reveal this month that lacked vital details and banged shares.
Introduction of Self-Driving Vehicle Lacks Clarity
Elon Musk’s recent 20-minute introduction to Tesla’s self-driving vehicle generated significant interest but left many questions unanswered, particularly regarding the future of the automaker.
While Musk’s presentation focused on the potential of Tesla’s technology, investors are left wondering about the company’s core business: selling cars. As Tesla gears up to report its third-quarter results, there are growing concerns about the impact of incentives and competition on its profit margins.
Expected Decline in Profit Margins and Deliveries
Analysts anticipate that Tesla will report a decline in its profit margin on auto sales for the third quarter, largely attributed to increased incentives designed to attract electric vehicle (EV) buyers. This is a crucial development, as it marks a shift in Tesla’s pricing strategy in the face of intensifying competition.
Furthermore, Tesla is likely to experience its first-ever drop in annual deliveries, as demand for its aging vehicle lineup struggles against a backdrop of cheaper EV alternatives in China and the emergence of new electric models from traditional US automakers.
Analyst Focus on Robotaxi Plans and Full Self-Driving Software
As Wall Street prepares for Tesla’s earnings call, a key area of focus will be the company’s plans for its robotaxi business, which is seen as a significant driver of Tesla’s $700 billion valuation.
Investors will be keen to hear more about production timelines and sales strategies for the Autopilot software, which Musk has touted as essential for the robotaxi concept.
During his presentation, Musk indicated that the robotaxi is expected to go into production in 2026, with a projected price point of under $30,000. Additionally, he mentioned that unsupervised operation of Tesla’s Full Self-Driving (FSD) software is slated to begin next year in California and Texas.
Regulatory Scrutiny on Full Self-Driving Software
In a concerning development for Tesla, the U.S. auto safety regulator recently opened an investigation into 2.4 million vehicles equipped with FSD software.
This inquiry follows reports of four collisions, including a fatal crash in 2023, raising alarms about the safety and efficacy of Tesla’s autonomous technology. This investigation could pose further challenges for Tesla as it seeks to reassure investors about the future of its self-driving initiatives.
As Tesla prepares to unveil its quarterly results, the combination of declining profit margins, potential decreases in annual deliveries, and growing regulatory scrutiny creates a complex landscape for the automaker. Investors will be closely watching how these factors influence Musk’s ambitious vision for the future of transportation.