Tesla shares under pressure as EV maker set to reveal worst results in seven years
Shares in Tesla came under pressure yesterday after the electric carmaker announced a round of price cuts before a difficult set of results for the company’s chief executive, Elon Musk.
Tesla stock fell as much as 5% in early trading before recovering slightly to a deficit of 3.4% in the wake of the announcement of price reductions around the globe, including slashing the cost of three of its leading electric vehicles (EVs) and its self-driving software.
Musk said at the weekend he had postponed a trip to India, including a meeting with the prime minister, Narendra Modi, because of “very heavy obligations” at the company.
The CEO faces a key conference call with the investment community today, when Tesla’s latest quarterly figures are expected to reveal its worst performance in seven years.
Tesla’s results come amid slowing global demand for EVs and pressure on prices from Chinese rivals. The company has already indicated a poor first quarter in terms of sales, after it revealed this month that deliveries had missed market expectations by about 13%.
Tesla attempted to boost demand for its EVs late on Friday by cutting the prices of three of its five models in the US, then went on to cut prices around the world over the weekend, including in China, the Middle East, Africa and Europe.
It cut the US prices of the Model Y, Tesla’s most popular car and the topselling EV, and also of the older, more expensive Models X and S. Those cuts lowered the starting price for a Model Y to $42,990 (£34,874), $72,990 for a Model S and $77,990 for a Model X. It also slashed the US price of its driver assistance software from $12,000 to $8,000.
It also emerged on Friday that Tesla was recalling all 3,878 Cybertrucks it has shipped since the vehicle was released in late 2023 because of a faulty accelerator pedal. A filing from the US safety regulator said owners had reported that the pedal pad could come loose and become lodged in the interior trim, causing the vehicle to accelerate unintentionally and increasing the risk of a crash.
Dan Ives, the managing director of the US financial services firm Wedbush Securities, said investors’ reaction to the price cuts yesterday showed they were worried “Tesla is panicking”, as well as reflecting concerns that the reductions would hit margins – a measure of profitability.
Tesla had already reacted to the slowdown by cutting more than 10% of its global workforce last week, about 14,000 staff.
Musk will face questions today about growth in China, plans for a cheaper EV known as the Model 2, and whether a reported switch in focus to self-driving taxis will affect the project.
Shares in Tesla have declined by more than 40% this year. Analysts at Wedbush wrote last week that today’s conference call represented a “moment of truth” for Musk and Tesla. “While we have seen much more tenuous times in the Tesla story going back to 2015, 2018, 2020 … this is clearly a bit different, as for the first time many longtime Tesla believers are giving up on the story and throwing in the towel,” Wedbush wrote in a note to investors.
Reuters reported this month that Tesla had halted development of the Model 2, prompting Musk to post on X that “Reuters is lying”, without citing any inaccuracies.
Musk said at the weekend he would reschedule his trip to India for later this year. He had been due to visit Delhi on Sunday and yesterday, and had been expected to announce an investment of $2bn-3bn, according to Reuters, with spending plans focused on building a new plant in the country.
Musk’s now postponed visit had also been expected to include meetings with executives at Indian space industry startups. The billionaire is awaiting Indian government regulatory approvals to begin offering his Starlink satellite broadband service in the country.