Like the debate about the question of whether Tesla should be valued As an automaker or a software company rages, CEO Elon Musk laid out his vision in no uncertain terms.
“If you only value Tesla as a car company, that's fundamentally the wrong framework,” Musk said Tuesday during Tesla's first-quarter earnings call.
Musk's comments came during a critical moment for Tesla. Ahead of the earnings announcement, Tesla faced increasing pressure from investors about its future. Investors were particularly concerned that Tesla could do that demolition plans for a new, more affordably priced car, as Musk had repeatedly telegraphed his intention to devote much of Tesla's resources to robotaxis and self-driving car technology. Investors have refused at the idea that a car company with declining sales would postpone the introduction of its new model in favor of developing a technology that does not yet exist.
Instead, Tesla split the difference. Musk has pushed up the production schedule of his new models from late 2025 to early 2025, with the possibility of them even arriving late this year, Musk said. While at the same time making it crystal clear that the investment thesis for the company should be entirely focused on its engineering efforts.
“If someone doesn't believe Tesla is going to solve autonomy, he or she shouldn't be an investor in the company,” Musk said.
When asked if the company could develop self-driving cars without him, Musk was confident the work was almost complete. “Even if I get abducted by aliens tomorrow, Tesla will solve autonomy, maybe more slowly, but at least for vehicles,” he said.
A bad quarter for Tesla
However, the down-the-middle strategy Tesla opted for contradicted what was a particularly high profit forecast given the company's poor performance. Investors and analysts were already prepared for a historically favorable development bad quarter of Tesla – and it was.
Earlier this month, Tesla released figures showing that car deliveries fell 8.5% in the first quarter, the first annual decline in four years. As the earnings reports showed, those bad numbers trickled down to the rest of the company Tesla's business. According to figures, sales fell 9%, the biggest drop since 2012, to a total of $21 billion in the first quarter. Total car sales fell by 13% compared to the previous year. The net result did not fare much better, decrease of 55%as the company brought in $1.1 billion in the quarter.
Perhaps the only silver lining for investors was that Tesla announced it would accelerate production of its upcoming cars. Investors had been eagerly awaiting further news from Tesla leadership on when new models would hit the market after a year report the company scrapped them entirely in favor of its robotaxi efforts. The new model, said to be an affordable car priced under $30,000, is still in the works.
When pressed by an analyst on the call about details of the cheaper Tesla, Musk declined to go into details. “We've said everything we wanted to on that front,” he replied.
However, the lack of details was good enough for Wall Street. Shares of Tesla rose more than 13% in after-hours trading Tuesday evening.
Tesla 'solves autonomy' for self-driving cars
In addition to the new car models, Musk also explained the self-driving technology that Tesla is developing. In describing the project, Musk painted a picture of flipping a switch to turn millions of Teslas around the world into self-driving cars.
“The way to think about Tesla is actually almost entirely in terms of solving for autonomy and being able to enable that autonomy for a massive fleet,” Musk said. “It could be the biggest increase in asset values in history if that happens, if you can drive unattended and fully self-driving.”
Tesla currently does not have a fully self-driving car. The latest autonomous vehicle software, called Full Self-Driving, still requires human supervision. To quell demand, Tesla earlier this week lowered the prices of its add-on software from $12,000 per year to $8,000.
On the call, Tesla executives tried to reassure investors that the poor quarter was just a lull until the company could perfect its self-driving technology. Musk reiterated that it is “currently between two big waves of growth.” The first wave referred to the initial proliferation of electric cars that Tesla helped usher in when it managed to sell its cars to people other than environmentally conscious consumers. According to Tesla, the second wave will come once self-driving cars become the norm and dominate the market.
That is why Tesla expects a difficult rest of the year with mediocre sales growth. “In 2024, our vehicle volume growth may be significantly lower than our 2023 growth rate as our teams work to launch next-generation vehicles and other products,” Tesla wrote in a shareholder presentation. During the call, Musk said he expected sales in 2024 to be higher than last year.
A first glimpse of Tesla's robotaxi app and prototype will be revealed on August 8, according to a message from Musk X. Musk made a similar claim in 2019saying that the Tesla robotaxis would be ready in 2020. Four years later, investors are still waiting.
This story originally ran Fortune.com
