At the very least, we should think that it will improve from the current situation. Automotive sales for the January-March period were $17 billion, 11% less than analysts expected. Earnings per share also fell short of expectations, and the gross profit margin of the main business, excluding emission allowance sales, fell to half of its peak. In addition, sales have fallen for the first time since the beginning of the coronavirus outbreak, making it clear that the company is losing its former luster.
However, EV purchases by customers who love new things have come to an end. According to Cox Automotive, EV sales in the U.S. have declined for the first time in a long time this year compared to the previous quarter. Prices have also dropped significantly.
Tesla still has big hopes. The company announced that it will launch a new model at an “affordable price” ahead of schedule. Reuters reported that development of the Model 2, which had a selling price of about $25,000, had been discontinued, but this may be an implicit reference to that model. Information remains unclear. If the company’s new models and fully autonomous robotaxi cars are a huge success and the company’s business returns to an expansionary trajectory, it would support Mr. Musk’s view that Tesla is simply in a period of growth.
Meanwhile, Tesla is investing more cash than it generates, and its competitors are getting stronger. GM revealed in its financial results on the 23rd that its gasoline-powered vehicles are doing well, giving it more room to invest in its EV business. It’s no wonder Musk wants investors to focus on the future he’s building with low-cost EVs, even though the details are unclear, rather than the somewhat unattractive current situation.
●Background news
*Tesla announced its first quarter results (ending March) with sales of $21.3 billion, down 9% from the same period last year. Automotive revenue fell 13% to $17.4 billion, about 11% less than analysts expected, according to LSEG data. Earnings per share were $0.34, lower than expectations of $0.45.See more
*The company announced that it will launch new models, including affordable models, in early 2025, ahead of schedule.
*Meanwhile, GM’s announced sales and operating income exceeded analysts’ expectations. The company raised its full-year earnings forecast.See more
(The author is a columnist for Reuters Breakingviews. This column is written based on the author’s personal views.)
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