Following Tesla’s fourth-quarter earnings report, which fell short of analyst estimates, Chief Executive Officer Elon Musk took center stage on the electric vehicle (EV) maker’s earnings call to address various investor concerns. Musk touched on key issues, including profitability, voting control amid the artificial intelligence (AI) boom, updates on Tesla’s humanoid robot, Optimis, and insights into the challenges facing Cybertruck deliveries.
Impact of High Interest Rates on Margins
Elon Musk addressed concerns about Tesla’s profitability, citing the impact of high-interest rates on the company’s margins. He remarked that if interest rates decrease swiftly, margins would be favorable; however, a slow decline in interest rates might hinder the company’s margins. Tesla highlighted that reduced vehicle prices in the fourth quarter contributed to lower revenue, as the company implemented significant price drops to counteract macroeconomic conditions, including high interest rates affecting consumer spending.
The broader auto industry also responded with discounts, with a 25% drop in the average sale price of Tesla vehicles in December compared to the previous year. The Federal Reserve’s indication of expected rate cuts in the second half of 2024 adds a layer of uncertainty to Tesla’s future pricing strategy.
Musk emphasized that it’s not a lack of desire but affordability in a high-interest-rate environment that is impacting Tesla vehicle purchases.
Elon Musk’s Quest for Influence in AI Initiatives
Musk shared his ambition for a “strong influence, but not control” of Tesla before intensifying the company’s AI initiatives. Earlier statements on X (formerly Twitter) revealed Musk’s desire for 25% voting control of Tesla to bolster the company’s position in the AI race. During the earnings call, Musk clarified that this level of control is aimed at ensuring his influence without being invulnerable to shareholder decisions.
While expressing his vision for Tesla becoming a leader in AI and robotics, Musk underscored concerns about being overruled by shareholder advisory firms without sufficient influence.
Tesla’s Humanoid Robot – Optimis
Discussing Tesla’s humanoid robot project, Optimis, Musk expressed optimism about shipping units as early as 2025. He acknowledged the uncertainty surrounding this new product but assured the public of ongoing updates on the project’s progress. Musk went further to label Optimis as having the potential to become the “most valuable product of any kind, ever.”
Tesla’s foray into humanoid robotics has been in development since 2022, leveraging AI technology from the company’s self-driving cars.
Cybertruck Challenges Tied to Production, Not Demand
Addressing concerns about Cybertruck deliveries, Musk clarified that challenges were primarily production-related rather than stemming from low demand. The first Cybertrucks were delivered at the end of 2023, with some investors expressing worries about delivery and profitability hurdles.
Musk mentioned the possibility of raising the Cybertruck’s price to meet high demand amid low supply but noted it doesn’t align with Tesla’s ethos. The company aims to deliver approximately 250,000 Cybertrucks annually in North America, highlighting the optimistic outlook for the futuristic electric pickup.
In the post-earnings call, Musk’s insights aimed to provide clarity on Tesla’s strategies and challenges, offering investors a comprehensive view of the company’s path forward in an evolving market.
