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