"Musk Gears Up to Address Robotaxi Inquiries in Tesla Earnings Call"
Investors and analysts are preparing to question Tesla CEO Elon Musk about the company's robotaxi ambitions during the upcoming earnings call on Wednesday, following a promotional event earlier this month that negatively impacted Tesla's stock value and revealed few details. The event, which lasted about 20 minutes, did not allow any questions about the self-driving vehicle, expected to be crucial for Tesla's future.
The lack of information at the event has heightened interest in Tesla’s core business performance. The electric car manufacturer is expected to report a decline in vehicle sales margins for the third quarter, affected by aggressive incentives used to attract electric vehicle buyers.
Additionally, Tesla may report its first annual delivery decline amid increasing competition from more affordable Chinese electric vehicles and new electric models from established U.S. automakers.
A significant part of Tesla's approximately $700 billion valuation hinges on Musk's assurances that the Autopilot software will be an integral part of its robotaxi service. Analysts are likely to seek clarity on production timelines and sales strategies during the post-earnings meeting.
Musk has stated that production of the robotaxi will begin in 2026, with a price under $30,000. He also mentioned that Tesla's Full Self-Driving (FSD) software could begin operating unsupervised in California and Texas in 2023.
Concerns about Tesla’s autonomous software plans have been underscored by a recent investigation from the U.S. auto safety regulator into 2.4 million Tesla vehicles equipped with FSD software, following several accidents including a fatal crash last year.
Despite these concerns, Tesla reported that by the end of the second quarter, its vehicles had traveled over 1.6 billion miles using FSD. The company continues to promote the software with zero-interest financing offers to buyers of its Model 3 or Model Y vehicles.
Since the Robotaxi Day event, Wall Street analysts have refocused on Tesla's core business metrics. Consensus among 23 analysts surveyed by Visible Alpha predicts Tesla’s automotive gross margin, excluding regulatory credits, to be 14.9% for the quarter ending September 30, slightly above the 14.6% recorded in the prior quarter.
Tesla reduced prices and offered incentives to boost demand amid high interest rates, but the results have been mixed. These measures are expected to impact the company's profit margins, which are generally stronger than those of traditional automakers.
The company is also expected to update its annual delivery forecast. Analysts predict that if Tesla does not deliver more than 516,000 vehicles in the fourth quarter, it could experience a minor annual delivery decline of about 0.3%.
In China, Tesla faces competition from domestic rivals like BYD, which offers a range of more affordable models. Despite this, Tesla’s sales in China surged by 66% in September, reaching 72,000 units and marking the best monthly performance this year. Helped by financing deals and local government subsidies, the company’s third-quarter sales in the country rose by 12%.
As the fourth quarter begins, Tesla has the potential to surpass last year’s sales record in China, supported by these positive trends.