0:00:00.040,0:00:04.200 Starting in the US where Tesla revealed the biggest slump in earnings 0:00:04.200,0:00:06.000 in more than a decade 0:00:06.000,0:00:09.960 as the road gets increasingly rocky for the electric car industry. 0:00:09.960,0:00:14.653 Tesla made profits of $1.1 billion in the first three months of the year. 0:00:14.653,0:00:18.150 That's a fall of 55% on this time. 0:00:18.150,0:00:22.172 Last year revenues were 9% lower 0:00:22.172,0:00:25.842 and both numbers were worse than investors had been expecting. 0:00:25.842,0:00:30.679 But Tesla shares, well, they've taken a real pounding this year. 0:00:30.679,0:00:34.143 They actually jumped by nearly 12% in after hours trade 0:00:34.143,0:00:38.979 after the company promised quicker progress on new more affordable models. 0:00:38.979,0:00:41.760 Erin Delmore has been looking at the numbers. 0:00:42.530,0:00:44.801 It's been a rocky road for Tesla this year. 0:00:44.801,0:00:48.839 Higher interest rates are taking a bite out of consumer purchasing power 0:00:48.839,0:00:50.776 and pushing big purchases out of reach. 0:00:50.776,0:00:55.302 Competition with China, especially rival electric vehicle maker BYD, 0:00:55.302,0:00:56.231 is heating up. 0:00:56.231,0:00:59.248 Sales have been falling and so is Tesla's stock. 0:00:59.248,0:01:01.295 It's down more than 40% this year. 0:01:01.295,0:01:02.472 The model Y. 0:01:02.472,0:01:05.817 The company's been cutting prices and announced layoffs. 0:01:05.817,0:01:09.473 And then on Tuesday, the company reported its first quarter earnings, 0:01:09.473,0:01:12.217 missing expectations on earnings and revenue. 0:01:12.217,0:01:15.017 And the company is anticipating lower deliveries this year, 0:01:15.017,0:01:16.198 compared to 2023. 0:01:16.198,0:01:19.493 But investors have one bright spot to look to, 0:01:19.493,0:01:23.321 Tesla announced it's speeding up the launch of a lower priced vehicle. 0:01:23.321,0:01:27.481 More affordable models could be a boon for cash strapped US consumers 0:01:27.481,0:01:32.069 and a hit in big competitive markets worldwide like China and India. 0:01:32.069,0:01:33.451 Erin Delmore there. 0:01:33.451,0:01:36.348 Well, I also spoke to Seth Goldstein, who's a strategist 0:01:36.348,0:01:38.469 at the investment manager Morning Star 0:01:38.469,0:01:41.260 where he chairs their committee on electric vehicles. 0:01:41.260,0:01:44.171 He gave us his reaction to the results from Tesla. 0:01:44.171,0:01:47.439 Well, we knew that deliveries were going to fall. 0:01:47.439,0:01:49.913 And so, we're likely going to see a revenue decline 0:01:49.913,0:01:53.823 and a larger profit decline due to the challenges in the quarter. 0:01:53.823,0:01:57.780 And not only just lower sales but the production issues as well, 0:01:57.780,0:02:00.036 as ramping up new vehicles like the cyber truck 0:02:00.036,0:02:01.929 that we're going to weigh on profits. 0:02:01.929,0:02:06.755 But looking at the quarter, you know, the bad news is already largely known. 0:02:06.755,0:02:11.831 So now, the question for investors was what was Tesla's strategy going forward. 0:02:11.831,0:02:16.200 Were they going to cancel the affordable vehicle as was rumored in the media? 0:02:16.200,0:02:18.129 Or were they going to continue it? 0:02:18.129,0:02:20.164 And Tesla said they're going to accelerate it. 0:02:20.164,0:02:24.495 Plus, full self-driving is on track to start generating more and more revenue. 0:02:24.495,0:02:29.447 So looking forward, I think the bad news was largely priced into the stock. 0:02:29.447,0:02:31.331 Tesla confirmed their strategy 0:02:31.331,0:02:33.913 and that's why we saw the stock rise in after hours, 0:02:33.913,0:02:36.768 despite results coming in below consensus. 0:02:36.768,0:02:38.899 Now, of course, what's going on with Tesla 0:02:38.899,0:02:41.149 reflects what's going on in the global economy 0:02:41.149,0:02:42.479 and things have changed radically 0:02:42.479,0:02:47.055 sincethis firm first came to our attention 0:02:47.055,0:02:50.598 and was a disruptor within the car industry. 0:02:50.598,0:02:55.886 Now, every big car maker in the world is getting its electric vehicles out there. 0:02:55.886,0:03:00.987 So, just talk us through the future for Tesla as the competition gets tougher. 0:03:02.057,0:03:05.399 Well, now Tesla is no longer the first mover. 0:03:05.399,0:03:08.639 They don't have that advantage of being the incumbit in the market. 0:03:08.639,0:03:12.282 Now they have to make the case to consumers of why you should buy a Tesla 0:03:12.282,0:03:13.879 versus another vehicle, 0:03:13.879,0:03:18.565 especially Tesla was one of the first long range electric vehicles, 0:03:18.565,0:03:21.760 versus early EVs had a much shorter range, 0:03:21.760,0:03:24.235 usually half the range of a Tesla or less. 0:03:24.235,0:03:26.702 And so, that was pretty easy for consumers 0:03:26.702,0:03:29.611 who wanted the longer range to choose a Tesla. 0:03:29.611,0:03:32.865 Now Tesla to rely on things like the full self-driving, 0:03:32.865,0:03:36.469 rely on the performance specs, the battery life, 0:03:36.469,0:03:41.120 offering consumers more infotainment while they charge, 0:03:41.120,0:03:43.947 those sorts of ancillary products and services 0:03:43.947,0:03:47.040 as a reason to buy Tesla over another EV brand 0:03:47.040,0:03:48.430 because the EV market, 0:03:48.430,0:03:51.370 especially in the luxury space where Tesla currently operates, 0:03:51.370,0:03:55.028 is largely saturated with new players and incumbents. 0:03:55.028,0:03:58.832 And so, Tesla no longer enjoys having that sort of market dominance 0:03:58.832,0:03:59.959 that they once had. 0:03:59.959,0:04:01.847 And just quickly Seth, are you concerned at all 0:04:01.847,0:04:07.000 about Elon Musk still being in charge of Tesla as the boss, as CEO? 0:04:07.000,0:04:11.400 There was a lot conversation some time ago when he bought X and the wrangling 0:04:11.400,0:04:13.299 and the legal wranglings over X 0:04:13.299,0:04:16.040 that he was not focused on Tesla enough. 0:04:16.040,0:04:17.713 He was busy with other things. 0:04:19.003,0:04:21.489 Well, Elon confirmed on the earnings call 0:04:21.489,0:04:24.040 that he spends the majority of his time at Tesla. 0:04:24.040,0:04:27.923 And I think we've seen a very strong management team from Tesla 0:04:27.923,0:04:31.241 that includes Tom Zoo, who's the effective COO, 0:04:31.241,0:04:34.216 who makes a lot of the pricing and manufacturing decisions. 0:04:34.216,0:04:39.927 And so, I think Elon is more than capable of continuing to be the CEO of Tesla 0:04:39.927,0:04:42.360 as well as meet his other business ventures. 0:04:42.360,0:04:46.841 And you know, with X, he's taking more of a technology role. 0:04:46.841,0:04:48.560 He's not the CEO of that company. 0:04:48.560,0:04:50.765 So, I think he'll be able to run Tesla 0:04:50.765,0:04:53.919 and Tesla will still be able to meet their goals. 0:04:54.809,0:04:57.140 Interesting, Seth Goldstein there from Morning Star. 0:04:57.140,0:05:00.340 Well, Tesla is the first of the so-called Magnific 7 0:05:00.340,0:05:03.233 - that's the tech companies that dominate US markets 0:05:03.233,0:05:05.240 to report quarterly earnings. 0:05:05.240,0:05:08.656 Today, we'll be hearing from Facebook and Instagram owner Meta. 0:05:08.656,0:05:13.805 Thursday, we have results from Google owner alphabet as well as Microsoft. 0:05:13.805,0:05:15.610 Over the past week or so, 0:05:15.610,0:05:19.953 around a trillion dollars has been wiped off the value of big tech companies. 0:05:19.953,0:05:22.942 But on Tuesday, US markets were higher 0:05:22.942,0:05:26.425 with the tech heavy NASDAQ index up 1.6%. 0:05:26.425,0:05:29.450 So maybe, some optimism is coming.