Tesla’s first-quarter earnings call for 2024 is tonight, and it’s shaping up to be a rough one. The stock is nosediving, and investors desperately want Elon Musk to right the ship — and, in doing so, reinspire their confidence in the company’s continued ability to generate returns.
Investors are concerned with profit margins, delivery figures, and the ever-present rumor of the entry-level model’s cancellation. Tesla has already put out the major announcement of the Model 3 Performance today, which doesn’t bode well for the earnings call itself — what’s the company hiding behind all that media flash?
While the Model 3 announcement appears to have righted Tesla’s stock price for the time being — though it may simply be trading flat on market uncertainty leading into the upcoming call — analysts appear torn on the company’s trajectory. Nasdaq quotes 12-month price targets from analysts as ranging from $310/share all the way down to just $22.86. Functionally, based on a current price of $144.92, that’s a double or nothing bet. Overall, estimates point to a slight rise over the next year.
As more competitors enter the EV space — and do so with better and better cars — Tesla is hitting a watershed moment. Demand for EVs may increase, particularly as ICE engines are phased out and regulatory structures encourage the shift to electrification, but demand for Teslas may not. Will the company maintain its dominance over EVs, or will more traditional automakers win out?
We’ll be tuning in to Tesla’s investor call at 5:30 PM Eastern, and live reacting here to all the statements, questions, and investor concerns. Will Musk explain away the company’s issues sufficiently, or will shares continue to tumble when the market bell rings tomorrow morning? Let’s find out together.
Update: 4/23/24 5:35 PM: We’re live! Pull up a chair and your slide deck, let’s get this thing started. We’re beginning with opening marks from Elon Musk, starting by talking about the $25,000 entry-level car, which he claims will be built on the same production lines as the existing models.
Update: 4/23/24 5:39 PM: Musk is talking up the latest semi-autonomous software, and doubling down on his commitment to robotaxis and a computer vision-only approach. Humans can drive with just a pair of eyes, but it’s not quite the same for cars. Maybe if you want to give them a few million years of evolution, they could figure it out.
Update: 4/23/24 5:41 PM: Car margins are down, and one mitigating measure being proposed is a reduction in costs for FSD — making it cheaper to buy and use. Tesla is still banking hard on software superiority, perhaps due to realizing how difficult hardware superiority really is, but Tesla’s software isn’t meaningfully better than the competition. It bites off more, sure, but can it chew it?
Update: 4/23/24 5:42 PM: The company is looking into efficiencies in capex, making better use of money that’s already been spend on real items. Those savings, apparently, will be reinvested into AI. Again with that priority.
Update: 4/23/24 5:42 PM: Production of 4680 cells is apparently ramping up, with the hope of always outpacing Cybertruck production. Given how the last few months have gone for the Cybertruck, that ramp may be very, very shallow.
Update: 4/23/24 5:42 PM: Musk is talking Optimus now, expecting sales by the end of next year. He thinks it can be bigger than the entire car business, and doesn’t see a maximum size for that market. For those of you who didn’t major in business, that means he sees no limit on the amount of money that people will be willing to spend on robots. Yep. No maximum amount at all.
Update: 4/23/24 5:45 PM: Musk: “Other autonomous car companies have been cutting a path through the regulatory jungle … that’s actually quite helpful.” Wild what happens when you collaborate with regulators rather than thumbing your nose at them.
Update: 4/23/24 5:47 PM: Musk thinks that there won’t be meaningful regulatory barriers to AV adoption, provided data comes out proving they’re safer than human drivers. Wake me up when that data comes out.
Update: 4/23/24 5:50 PM: The old pitch of owner-run robotaxis is back. The fleet will be managed by Tesla, but owners will be able to “rent out” their car, with controls over who gets to access it. Musk refers to machine learning on an ever-increasing fleet as a “flywheel,” that keeps moving on its own momentum, and he uses Google Search as another example. Not the monopoly, or anything, but the flywheel.
Update: 4/23/24 5:52 PM: Musk wants to use the entire fleet — “hundreds of millions,” in his mind — as a massive distributed compute network. Remember SETI@home? I remember SETI@home. Was it overwhelmingly popular? Do people want other entities using their computers for unknown purposes? I forget.
Update: 4/23/24 5:55 PM: Musk is talking about internal versions of FSD, which he claims are far ahead of the version that’s currently available to consumers. Those versions apparently can’t be released due to their own quirks, but it seems the company is even more “move fast and break things” internally than it is to the outside world.
Update: 4/23/24 5:57 PM: Investors asked for a firm timeline on the entry—level $25,000 car, but the folks at Tesla seem reluctant to give hard numbers. Much more discussion of capex optimizations to introduce new models at lower costs, but not much discussion of when that will happen.
Update: 4/23/24 5:57 PM: Tesla is now producing 1,000 Cybertrucks per month, but the focus is still on cost efficiency. There’s a brief mention of “supplier issues,” though it’s unclear what that might be.
Update: 4/23/24 5:58 PM: When asked about other automakers licensing FSD, Musk replied that Tesla is in talks with one other automaker to use the FSD software. Didn’t say who.
Update: 4/23/24 5:59 PM: The Semi fleet over at Pepsi will be expanded “marginally” this year , and the learnings from that fleet will be pushed into future trucks. The Reno factory is in progress, but no discussion about when more trucks will roll off the assembly line.
Update: 4/23/24 6:00 PM: Analyst question time.
Update: 4/23/24 6:01 PM: First question is about “new models,” and whether or not they’re actually new. The analyst makes mention of the Model 3 Highland update, and all the work and retooling that the facelift took — if future cars are to roll off the same lines, how different can they be? Musk did not answer.
Update: 4/23/24 6:01 PM: Second analyst question is about Musk’s personal focus, given all the companies he runs. Musk claims Tesla is the majority of his focus, and he still wants it to be prosperous.
Update: 4/23/24 6:01 PM: The next question is about 2024 growth, to which Musk essentially replied “Yes” — he thinks Tesla will sell more cars this year than last.
Update: 4/23/24 6:04 PM: Next question is about Chinese competitors, and how long it would take one to match Tesla’s automotive hardware. Musk replied that Tesla’s sales drop in China was less than that of the Chinese competitors, and that Tesla is fundamentally an AI company — not a carmaker. He says that’s the wrong framework to apply. “If someone doesn’t think Tesla’s gonna solve autonomy, I don’t think they should be an investor in the company.”
Update: 4/23/24 6:04 PM: Musk claims that FSD V12.3 is essential to understanding the company. Robotaxis are essential to the company, Optimus is essential to the company, and cars are more of a means to that end.
Update: 4/23/24 6:08 PM: Analysts are asking about Musk’s goal to get “25% voting control” of the company, and whether he has a plan to make that happen. Musk responds that he isn’t essential to the company solving autonomy — if he were “kidnapped by aliens,” it would still happen — just that he’s the key to it happening more quickly. This is an odd approach to take when analysts are concerned about his lack of focus, to directly tell them that the company can achieve its goals without him. It’s a bold move, Cotton. If anything, his plan is share buybacks, by the way.
Update: 4/23/24 6:10 PM: Who is Tesla firing, and what does the company risk without them? Very interesting question, and the response is that the company is cutting everywhere. “Any tree which grows, it needs pruning.” The angle is that the company is error-correcting for bad hires in the past, which is a very interesting way to look at your employees. An employee is Good or Bad, and that status never changes.
Update: 4/23/24 6:13 PM: Another analyst wants to know about FSD licensing, and how that’s progressing. “I think it needs to be obvious that our approach is the right approach” is Musk’s response. It is not obvious that Tesla’s vision-only, no-LIDAR approach is the right approach. “Once it becomes obvious that, if you don’t have this on your car, no one wants your car” is an interesting statement to say about a feature that consumers emphatically do not trust.
Update: 4/23/24 6:15 PM: Musk thinks it’s possible that Tesla signs an FSD licensing deal this year, “maybe more than one.” He doesn’t think the feature will actually show up on non-Teslas for three years, given the work that other OEMs will need to do to their own vehicles for implementation.
Update: 4/23/24 6:18 PM: Can Tesla keep lowering prices and stay profitable? Musk stammered in the affirmative, and it sounds like the angle from the company at large is to compensate for profit margins with volume. It’s the “fundamental affordability question,” ensuring that people who are “living paycheck-to-paycheck” can afford Tesla cars. So, where’s that $25,000 model? Where’s the $35,000 Model 3?
Update: 4/23/24 6:20 PM: Next question is about expanding the geofence of FSD, opening it up to new markets like China. Musk says that FSD works well regardless of market, and that it’s up to regulatory approval to decide where the software can be used. He compares the car to the average driver taking a vacation, which is not a heartening statement to anyone who’s vacationed in Rome. I haven’t, but I hear the traffic is wild.
