The company is at a pivotal moment, while investors show distrust about the plans for “greater control” by Elon Musk, the cut in prices and the announcement of a pause in production at the Berlin factory.
The profitability and Tesla deliveries will be on investors’ minds when the world’s most valuable automaker reports results Wednesday. The data comes days after the company made sharp price cuts and announced a pause in production at the factory in Berlin, Germany.
It should be noted that the shares of the company Elon Musk have given up more than one 17% in the last month. Product of doubts about the profitability of the company. Only on the last day did they collapse 1.6%, to quote this Tuesday in US$208.8 by paper. Falling battery material prices expected to allow Tesla to show a slight increase in profit margin compared to the previous quarter.
However, it will be considerably lower than last year, and pressure is mounting after price cuts in Asia and Europe and the rising costs associated with expanding Cybertruck production.
CEO Musk said he wants more control, which has raised questions among corporate governance experts and retail investors.
Here are the key points on investors’ minds.
Price and demand
- Tesla cut prices for its most popular vehicle, the Model Y, in Europe and China this month, escalating a price war that began more than a year ago. It has reduced the price of the Model Y, its most popular vehicle, by up to 26.5% in the last year in the United States.
- Musk had previously blamed high borrowing costs for hurting demand for electric vehicles (EVs). With interest rates expected to decline, he will be under pressure to signal where prices and demand are headed.
Supply
- The price cuts came days after Tesla announced it will suspend most production at its German factory from January 29 to February 11 due to a lack of components, as shipping routes had to be adjusted due to to attacks on ships in the Red Sea.
- The open question is what specifically stopped production. The nearly two-week shutdown in Europe comes as Tesla faces growing competition from traditional automakers such as Volkswagen and BMW, as well as Chinese electric vehicle makers such as BYD, Xpeng and Nio.
- Wall Street also expects Tesla to set a delivery target for the year, which analysts predict will be 2.19 million, according to Visible Alpha. This represents a 21% increase from 2023 and is well below the long-term goal of 50% that Musk set about three years ago.
Margins
- Automotive gross margin is expected to rise to 17.7% in the fourth quarter from 17.3% the previous quarter and decline from 25.1% last year, according to nine analysts surveyed by Visible Alpha. The short-term increase is partly due to falling prices for lithium, cobalt and nickel used in electric vehicle batteries.
- Costs related to the production of the Cybertruck electric pickup truck with stainless steel panels will also pressure margins.
Next Generation
- The timeline for the next generation of vehicles was the top question posed by investors at a Tesla-sponsored forum for individual investors, as of last Friday.
Musk’s compensation and control
- The second most popular question was whether investors should worry after Musk recently tweeted that he would be uncomfortable leading the company in artificial intelligence if he didn’t have at least 25% voting control.
- Musk’s previous $56 billion compensation package made him one of the richest people in the world and is under judicial review.
- The idea of pursuing artificial intelligence outside of Tesla raises questions about Musk’s duty to shareholders.
Source: Ambito
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