Elon Musk delivered a terrible quarter and tries to appease Tesla (TSLA) investors with more hype. I offer a musical tribute to Musk. Care to guess it now?
Spotlight Elon Musk
The Wall Street Journal comments Elon Musk Needs Cheaper Teslas to Pay for Everything Else He Wants
Tesla on Tuesday announced something totally unexpected from a company run by Elon Musk: a compromise.
The surprise passage of its highly anticipated first-quarter results came in the outlook statement.
“We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.”
I see this differently. Musk will say anything to protect share price. How is this different than any of thousands of promises Musk has made and not delivered?
Ans look at the date, always a year away.
Musical Tribute to Elon Musk
The Wall Street Journal continues
This [tomorrow story] is exactly what investors wanted to hear after a wave of doubt about the company’s commitment to producing a new mass-market car. The shares rose about 10% in Wednesday trading.
But there was a twist: The company went on to explain that these new models will combine elements of both its current production platform and its “next generation” one under development. That means cost savings will be lower than previously expected, but so will capital spending as existing production capacity can be adapted to the new products. Tesla won’t be opening new factories dedicated to a cut-price vehicle any time soon.
In other words, Tesla is trading radicalism for speed of delivery and capital efficiency, at least in the medium term. It is a sensible decision from a company that has historically preferred to take the heroic road. Institutional investors will likely love it; the Tesla fan base perhaps less so.
For starters, Tesla has not done anything., Rather Musk has promised to do something, not tomorrow, but next year.
Perhaps he will, this time, if for no other reason than the goal is modest and nebulous. What exactly did he promise anyway?
I wonder if he rushes the “next generation” of vehicles, whatever they are, before they are ready.
Look at Tesla’s ridiculous cybertruck, a total monstrosity. The next generation of car better be better.
Terrible first-quarter results explain why Tesla is reaching for a new approach. With electric-vehicle sales under pressure, the company burned through $2.5 billion of cash—far more than analysts had expected—by combining the lowest quarterly operating cash flow since early 2020 with record capital spending. Carmakers unravel very quickly and expensively when sales fall, and Tesla is no different.
As revenues fell 13% year over year in the first quarter, inventories rose 10% to around $16 billion. These may be parts and unsold Teslas stuck in transit—the scenario emphasized by management on a call with investors—or they may be cars sitting on lots waiting for buyers.
All Hype, No Details
The new plan has a shot at reviving sales growth next year: Musk said that the new models would come “early 2025 if not late this year.” Beyond that, though, he gave few details, pointedly declining to answer analysts’ questions on the topic during the call. That leaves the door open for speculation on all sides, with bulls claiming that the affordable Tesla project is being brought forward and bears emphasizing the compromises.
Refusal to provide details means one thing: Musk has no details to offer.
It’s just more hype that’s perpetually a year away.
FSD Hype
The other wrinkle in the new plan is that Musk still seems much more interested in cracking the code to self-driving vehicles than in making a cheaper electric car. “If somebody doesn’t believe Tesla is going to solve autonomy, I think they should not be an investor in the company,” Musk said when asked by Morgan Stanley analyst Adam Jonas about Chinese competition to produce a low-cost EV.
Musk is right that Tesla’s valuation doesn’t add up without driverless cars, regardless of its growth in deliveries. So it was disappointing that the company gave investors no new ways to track its progress or gain confidence in its technology beyond well-worn assertions that it has the right approach.
No Radar
Tesla is taking a riskier road to autonomy than the likes of Mercedes-Benz and Alphabet, rejecting expensive lidar sensors and leaning into artificial intelligence. The approach should win on unit cost, but only if it actually delivers technologically. Meanwhile, Tesla’s spending on Nvidia’s AI-training chips and data centers is exacerbating its financial strain.
Robotaxi Hype
The company is holding an event to unveil a “robotaxi” on Aug. 8, but its self-driving technology requires constant supervision, suggesting delivery of truly driverless Teslas is still years away. Concrete details of its approach and performance benchmarks could help build investor confidence in what is usually seen as a moonshot, though.
Musk only has eyes for robots and AI, but selling cars is the cash machine capable of funding higher-tech dreams. His first priority must be to fix it.
Musk’s approach won’t work. Artificial intelligence cannot see through heavy rain, snow, and fog.
It’s not that AI is bad. I don’t know one way or another. Rather, cameras alone, AI or not, are insufficient.
Tesla is on the wrong path. Waymo is far ahead. Mercedes-Benz will soon be ahead, if it’s not already.
Tesla’s Deliveries Drop for First Time Since 2020
Tesla’s (TSLA) quarterly deliveries in the first quarter of 2024, are down 8.5% from a year earlier. It’s the first quarterly decline since 2020.
Tesla blames production setbacks for the Decline in Quarterly Deliveries, but falling demand is the bigger issue.
On April 2, I commented Tesla’s Deliveries Drop for First Time Since 2020, It’s Demand Not Supply
Tesla’s heydays of surging demand growth is over. Competition is increasing and relative demand growth, if not absolute demand growth, is falling.
If Tesla can scale up semi production that would be a big boost. But Elon Musk has been promising 50,000 semis a year, every year for four years and has delivered a grand total of 100.
Only 35 Class 8 Truck EV Charging Stations
One of the things holding up use of electric semis is expense. A second is the number of charging stations.
Please note there are 4 Million Semis on the Road, Only 35 Class 8 Truck EV Charging Stations
Electrek says Tesla’s giga factory is only about 30% complete and Tesla hasn’t expanded the facility for years.
Elon Musk Fires 10 Percent of Tesla Workforce
On April 15, I noted Elon Musk Fires 10 Percent of Tesla Workforce, Prepares for “Next Phase of Growth”
In preparation for more growth, Musk issues a memo announcing an workforce cut of 10 percent and two top Tesla (TSLA) executives resign.
One does not prepare for growth by firing staff, pausing construction of the giga semi factory, and repeating the same hollow lies every year since 1016.
Tesla is Dead Last in Autonomous Driving
More Elon Musk Vaporware
On April 8, I commented Tesla’s Robotaxi August Launch Will Be More Elon Musk Vaporware
On August 8, Elon Musk will make an announcement on robotaxis. Tesla lags Waymo so badly that Musk is not even near the ballpark.
On August 8, expect to hear more promises, not for August 9, but for Musk’s tomorrow, always a year away.