Tesla thumbs a ride on uncertain low-cost future

Defying gravity. Tesla’s disappointing first-quarter earnings show just how kind pandemic was to Elon Musk’s electric-vehicle maker. At its peak in 2022, when electric automaker sported an over-$1 trillion valuation, it was wildly profitable and growing at breakneck speed. With electric sales now sputtering, Tesla’s growth has stalled. That leaves Musk trying to convince shareholders in a company now valued at $450 billion that future will be as good as past.

At very least, y should hope it will be better than present. Revenue of $17 billion for three months ended March 31 was 11% less than analysts expected, according to LSEG. Earnings per share missed mark too, and Tesla’s gross profit margin in its core business, justed for regulatory credit sales, is half what it was at its peak. In a furr sign that Tesla’s luster is fing, sales fell year-on-year for first time since Covid-19’s onset.

In retrospect, some kind of post-pandemic comedown was inevitable. During those years, consumers h more money than usual at ir disposal, and Tesla h no effective competition. Its biggest U.S. rivals, General Motors and Ford Motor, were hobbled by parts shortages, and ir combined share of battery-powered vehicle market fell to below 5%. But eager early buyers are now exhausted. U.S. electric-vehicle sales notched ir first quarter-over-quarter decline in years in 2024, according to Cox Automotive. Pricing has crashed back to earth.

Tesla still has a big hope: company said that it will accelerate work on “affordable” versions of its cars, perhaps hinting at a long-awaited $25,000 vehicle, despite an earlier Reuters report that effort h been nixed. Better yet, Musk says production will begin sooner than previously promised, though details on what exactly is in works remain frustratingly vague. dream is that this will make good on Musk’s mantra that Tesla is merely “between growth waves,” before wildly successful new models or self-driving robotaxis send it back to stratosphere.

In meantime, though, Tesla is investing more cash than it generates, and competitors are getting stronger. GM said in its own results on Tuesday that its combustion-engine business is going gangbusters, which provides boss Mary Barra with profit she can plow back into company’s electric-vehicle business. No wonder Musk wants investors to focus on Tesla’s cheap-car future – however speculative – rar than its somewhat unappealing present.