1 00:00:00,040 --> 00:00:04,200 Starting in the US where Tesla revealed the biggest slump in earnings 2 00:00:04,200 --> 00:00:06,000 in more than a decade 3 00:00:06,000 --> 00:00:09,960 as the road gets increasingly rocky for the electric car industry. 4 00:00:09,960 --> 00:00:14,653 Tesla made profits of $1.1 billion in the first three months of the year. 5 00:00:14,653 --> 00:00:18,150 That's a fall of 55% on this time. 6 00:00:18,150 --> 00:00:22,172 Last year revenues were 9% lower 7 00:00:22,172 --> 00:00:25,842 and both numbers were worse than investors had been expecting. 8 00:00:25,842 --> 00:00:30,679 But Tesla shares, well, they've taken a real pounding this year. 9 00:00:30,679 --> 00:00:34,143 They actually jumped by nearly 12% in after hours trade 10 00:00:34,143 --> 00:00:38,979 after the company promised quicker progress on new more affordable models. 11 00:00:38,979 --> 00:00:41,760 Erin Delmore has been looking at the numbers. 12 00:00:42,530 --> 00:00:44,801 It's been a rocky road for Tesla this year. 13 00:00:44,801 --> 00:00:48,839 Higher interest rates are taking a bite out of consumer purchasing power 14 00:00:48,839 --> 00:00:50,776 and pushing big purchases out of reach. 15 00:00:50,776 --> 00:00:56,231 Competition with China, especially rival electric vehicle maker BYD, is heating up. 16 00:00:56,231 --> 00:00:59,248 Sales have been falling and so is Tesla's stock. 17 00:00:59,248 --> 00:01:01,295 It's down more than 40% this year. 18 00:01:01,295 --> 00:01:02,472 The model Y. 19 00:01:02,472 --> 00:01:05,817 The company's been cutting prices and announced layoffs. 20 00:01:05,817 --> 00:01:09,473 And then on Tuesday, the company reported its first quarter earnings, 21 00:01:09,473 --> 00:01:12,217 missing expectations on earnings and revenue. 22 00:01:12,217 --> 00:01:15,017 And the company is anticipating lower deliveries this year, 23 00:01:15,017 --> 00:01:16,198 compared to 2023. 24 00:01:16,198 --> 00:01:19,493 But investors have one bright spot to look to, 25 00:01:19,493 --> 00:01:23,321 Tesla announced it's speeding up the launch of a lower priced vehicle. 26 00:01:23,321 --> 00:01:27,481 More affordable models could be a boon for cash strapped US consumers 27 00:01:27,481 --> 00:01:32,069 and a hit in big competitive markets worldwide like China and India. 28 00:01:32,069 --> 00:01:33,451 Erin Delmore there. 29 00:01:33,451 --> 00:01:36,348 Well, I also spoke to Seth Goldstein, who's a strategist 30 00:01:36,348 --> 00:01:38,469 at the investment manager Morning Star 31 00:01:38,469 --> 00:01:41,260 where he chairs their committee on electric vehicles. 32 00:01:41,260 --> 00:01:44,171 He gave us his reaction to the results from Tesla. 33 00:01:44,171 --> 00:01:47,439 Well, we knew that deliveries were going to fall. 34 00:01:47,439 --> 00:01:49,913 And so, we're likely going to see a revenue decline 35 00:01:49,913 --> 00:01:53,823 and a larger profit decline due to the challenges in the quarter. 36 00:01:53,823 --> 00:01:57,780 And not only just lower sales but the production issues as well, 37 00:01:57,780 --> 00:02:00,036 as ramping up new vehicles like the cyber truck 38 00:02:00,036 --> 00:02:01,929 that we're going to weigh on profits. 39 00:02:01,929 --> 00:02:06,755 But looking at the quarter, you know, the bad news is already largely known. 40 00:02:06,755 --> 00:02:11,831 So now, the question for investors was what was Tesla's strategy going forward. 41 00:02:11,831 --> 00:02:16,200 Were they going to cancel the affordable vehicle as was rumored in the media? 42 00:02:16,200 --> 00:02:18,129 Or were they going to continue it? 43 00:02:18,129 --> 00:02:20,164 And Tesla said they're going to accelerate it. 44 00:02:20,164 --> 00:02:24,495 Plus, full self-driving is on track to start generating more and more revenue. 45 00:02:24,495 --> 00:02:29,447 So looking forward, I think the bad news was largely priced into the stock. 46 00:02:29,447 --> 00:02:31,331 Tesla confirmed their strategy 47 00:02:31,331 --> 00:02:33,913 and that's why we saw the stock rise in after hours, 48 00:02:33,913 --> 00:02:36,768 despite results coming in below consensus. 49 00:02:36,768 --> 00:02:38,899 Now, of course, what's going on with Tesla 50 00:02:38,899 --> 00:02:41,149 reflects what's going on in the global economy 51 00:02:41,149 --> 00:02:42,479 and things have changed radically 52 00:02:42,479 --> 00:02:47,055 sincethis firm first came to our attention 53 00:02:47,055 --> 00:02:50,598 and was a disruptor within the car industry. 54 00:02:50,598 --> 00:02:55,886 Now, every big car maker in the world is getting its electric vehicles out there. 55 00:02:55,886 --> 00:03:00,987 So, just talk us through the future for Tesla as the competition gets tougher. 56 00:03:02,057 --> 00:03:05,399 Well, now Tesla is no longer the first mover. 57 00:03:05,399 --> 00:03:08,639 They don't have that advantage of being the incumbit in the market. 58 00:03:08,639 --> 00:03:12,282 Now they have to make the case to consumers of why you should buy a Tesla 59 00:03:12,282 --> 00:03:13,879 versus another vehicle, 60 00:03:13,879 --> 00:03:18,565 especially Tesla was one of the first long range electric vehicles, 61 00:03:18,565 --> 00:03:21,760 versus early EVs had a much shorter range, 62 00:03:21,760 --> 00:03:24,235 usually half the range of a Tesla or less. 63 00:03:24,235 --> 00:03:26,702 And so, that was pretty easy for consumers 64 00:03:26,702 --> 00:03:29,611 who wanted the longer range to choose a Tesla. 65 00:03:29,611 --> 00:03:32,865 Now Tesla to rely on things like the full self-driving, 66 00:03:32,865 --> 00:03:36,469 rely on the performance specs, the battery life, 67 00:03:36,469 --> 00:03:41,120 offering consumers more infotainment while they charge, 68 00:03:41,120 --> 00:03:43,947 those sorts of ancillary products and services 69 00:03:43,947 --> 00:03:47,040 as a reason to buy Tesla over another EV brand 70 00:03:47,040 --> 00:03:48,430 because the EV market, 71 00:03:48,430 --> 00:03:51,370 especially in the luxury space where Tesla currently operates, 72 00:03:51,370 --> 00:03:55,028 is largely saturated with new players and incumbents. 73 00:03:55,028 --> 00:03:58,832 And so, Tesla no longer enjoys having that sort of market dominance 74 00:03:58,832 --> 00:03:59,959 that they once had. 75 00:03:59,959 --> 00:04:01,847 And just quickly Seth, are you concerned at all 76 00:04:01,847 --> 00:04:07,000 about Elon Musk still being in charge of Tesla as the boss, as CEO? 77 00:04:07,000 --> 00:04:11,400 There was a lot conversation some time ago when he bought X and the wrangling 78 00:04:11,400 --> 00:04:13,299 and the legal wranglings over X 79 00:04:13,299 --> 00:04:16,040 that he was not focused on Tesla enough. 80 00:04:16,040 --> 00:04:17,713 He was busy with other things. 81 00:04:19,003 --> 00:04:21,489 Well, Elon confirmed on the earnings call 82 00:04:21,489 --> 00:04:24,040 that he spends the majority of his time at Tesla. 83 00:04:24,040 --> 00:04:27,923 And I think we've seen a very strong management team from Tesla 84 00:04:27,923 --> 00:04:31,241 that includes Tom Zoo, who's the effective COO, 85 00:04:31,241 --> 00:04:34,216 who makes a lot of the pricing and manufacturing decisions. 86 00:04:34,216 --> 00:04:39,927 And so, I think Elon is more than capable of continuing to be the CEO of Tesla 87 00:04:39,927 --> 00:04:42,360 as well as meet his other business ventures. 88 00:04:42,360 --> 00:04:46,841 And you know, with X, he's taking more of a technology role. 89 00:04:46,841 --> 00:04:48,560 He's not the CEO of that company. 90 00:04:48,560 --> 00:04:50,765 So, I think he'll be able to run Tesla 91 00:04:50,765 --> 00:04:53,919 and Tesla will still be able to meet their goals. 92 00:04:54,809 --> 00:04:57,140 Interesting, Seth Goldstein there from Morning Star. 93 00:04:57,140 --> 00:05:00,340 Well, Tesla is the first of the so-called Magnific 7 94 00:05:00,340 --> 00:05:03,233 - that's the tech companies that dominate US markets 95 00:05:03,233 --> 00:05:05,240 to report quarterly earnings. 96 00:05:05,240 --> 00:05:08,656 Today, we'll be hearing from Facebook and Instagram owner Meta. 97 00:05:08,656 --> 00:05:13,805 Thursday, we have results from Google owner alphabet as well as Microsoft. 98 00:05:13,805 --> 00:05:15,610 Over the past week or so, 99 00:05:15,610 --> 00:05:19,953 around a trillion dollars has been wiped off the value of big tech companies. 100 00:05:19,953 --> 00:05:22,942 But on Tuesday, US markets were higher 101 00:05:22,942 --> 00:05:26,425 with the tech heavy NASDAQ index up 1.6%. 102 00:05:26,425 --> 00:05:29,450 So maybe, some optimism is coming.