Tesla’s mounting troubles: Investors, prepare for worst results in 7 years as EV sales crash

Tesla investors are bracing themselves for what could be the company’s worst performance in seven years as quarterly results loom. The carmaker is grappling with a slowdown in demand and fierce competition in a price war.

Amidst these challenges, shareholders are also questioning whether Tesla is undergoing a significant shift in direction. Reports suggesting a slowdown in plans for a more affordable $25,000 electric car, unofficially dubbed the Model 2, in favour of prioritizing self-driving “robotaxis” have raised eyebrows.

While Elon Musk, Tesla’s CEO, denies any change in plans regarding the Model 2, he has emphasized the importance of focusing on autonomy. Musk recently announced the launch of a Tesla robotaxi slated for August 8, further fueling speculation about the company’s strategic focus.

Investors are grappling with the dilemma of whether Tesla will remain a large-scale car manufacturer or transition into a provider of autonomous technology, as per a report by the Financial Times. James Anderson, managing partner at Lingotto Investment Management, describes this as an ongoing debate between margin and volume.

The public unveiling of the robotaxi in August is anticipated to be a pivotal moment for Tesla’s self-driving technology, according to Anderson. Tom Slater from Baillie Gifford echoes this sentiment, highlighting investor enthusiasm for Tesla’s self-driving capabilities despite a predicted quieter year for car sales.

Tesla’s “full self-driving” mode, available for a monthly fee, represents a significant advancement, enabling the car to steer, brake, and accelerate without human intervention, although it still requires driver attention.

Christopher Tsai from Tsai Capital anticipates increased competition in the electric vehicle market but believes Tesla will maintain its lead in autonomous driving and ramp up production in the years ahead.

However, some analysts, like Gary Black of The Future Fund, note that clarity on Tesla’s strategy may be lacking in the upcoming quarterly results. Barclays analyst Dan Levy anticipates underwhelming results, with the lowest gross margin since 2017 and potentially negative free cash flow.

Tesla’s recent 8 per cent decline in car sales adds to the apprehension among investors, prompting concerns about the company’s future direction. Deutsche Bank analyst Emmanuel Rosner warns of a potential shift in Tesla’s investor base, with a transition from those focused on electric vehicle volume to AI and tech investors with longer time horizons.

In other news that shows how problems are just mounting for Tesla, the EV company had to recall almost all of the Cybertrucks they delivered because of a faulty fitting in the footwell that would cause the accelerator to get stuck at 100 per cent

As Tesla navigates these challenges, uncertainties surrounding its strategic shift and quarterly performance continue to weigh on investor sentiment, signalling a pivotal moment for the company’s future trajectory.

(With inputs from agencies)