Tesla Earnings Report Could Add to Concerns About Its Strategy
Tesla is expected to report on Tuesday that it made less money in the first three months of the year because of its tepid car sales, reinforcing concern among investors that the company led by Elon Musk is losing ground in the market for electric vehicles.
A slump in earnings was seen as 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 lay off 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 bring costs in line with sinking revenue.
A year ago, in the first quarter of 2023, Tesla said it made $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, lowering the amount it makes on each car it sells. For a while, that strategy seemed to help bolster the company’s sales but Tesla now appears to be struggling to attract buyers even with lower prices.
Tesla investors are increasingly worried that its falling sales and profit are a symptom of larger problems, possibly pointing to the company’s inability to effectively respond to increased competition from established automakers and new carmakers from China.
Mr. Musk signaled recently that Tesla would focus on autonomous driving technology and a vehicle he called the Robotaxi, dismaying investors who had expected the company to develop a new, lower-priced model that could make electric cars affordable to a broader range of customers and people in more countries.
Investors are hoping that Mr. Musk will answer questions about Tesla’s strategy when he holds a conference call at 5:30 p.m. on Tuesday. But Mr. Musk has often disappointed such expectations in the past, and he has appeared unfazed by the 40 percent decline in the price of Tesla shares this year.