Dive Brief:

• As manufacturers pull back on electric vehicles, there is an “increasing appetite for credits” in the space which means a “steady stream of revenue” for Elon Musk-headed EV maker Tesla, CFO Vaibhav Taneja said Tuesday during the company’s Q1 earnings call. Taneja, previously Tesla’s chief accounting officer, took the EV maker’s top financial seat in August, following the departure of former CFO Zachary Kirkhorn, CFO Dive previously reported.
• Taneja commented after the Austin, Texas-based Tesla reported its steepest drop in sales for its first quarter in over a decade, with total automotive revenues dropping 13% year-over-year to reach $17.3 billion, according to the company’s earnings results. Global EV sales have also continued to face pressure, as carmakers “prioritize hybrids over EVs,” the company warned.
• “Obviously, seeing others pull back from EV is not the future we want,” Taneja said. “We would prefer it [if] the whole industry went all in.”

Dive Insight:

Overall sales in the EV space have slowed in recent years, with all-electric car sales in the U.S. for 2023 reaching an estimated 1.1 million units, according to data compiled by InsideEVs. 2024 is expected to be an even slower year, with consumers waiting for more charging infrastructure and cheaper prices before purchasing EVs, the publication said.

For Tesla, its lukewarm Q1 results represent its sharpest dip in sales since 2012, coming despite efforts by the EV maker to bolster its profitability and cut costs throughout 2023. Tesla’s total revenue decreased by 9% to $21.3 billion for the quarter ended March 31, thanks in part to a reduction in its average vehicle selling price as well as a slump in vehicle deliveries, according to its investor deck published Tuesday.

Macroeconomic pressures, “seasonality” and other factors contributed to Tesla’s dip in revenue, Taneja said Tuesday, with auto margins declining from 18.9% to 18.5%, he said. Tesla previously slashed prices for various models, and, “excluding the impact of Cybertruck, the impact of pricing actions was largely offset by reductions in per unit costs” as well as the recognition of revenue for the introduction of its Autopark feature into models that previously lacked it, Taneja said.

The company is also dealing with lingering issues that have cropped up surrounding its long-awaited Cybertruck product, with Tesla reportedly pausing deliveries after users reported a potentially fatal flaw with the truck’s accelerator pedal, according to a recent report by the New York Post.

As it looks to offset these and other pressures, Tesla has undertaken numerous efforts aimed at upping its profitability and regaining investor confidence. The company announced a restructuring plan focused on fostering growth, where it will lay off approximately 10% of its global workforce, CEO Elon Musk said in a memo obtained by CNBC according to a report last week.

Musk attempted to alleviate investor worries in the face of Tesla’s disappointing quarter by arguing that valuing Tesla purely as an auto company is fundamentally “just the wrong framework,” he said Tuesday during the earnings call. Rather, the company should be valued as an AI or a robotics company, Musk said.

He pointed to ongoing expansion by Tesla for its AI infrastructure and training, as well as the development of future projects such as its “purpose-built robotaxi, or Cybercab,” which the company will showcase in August, Musk said during the call. Tesla’s efforts to create fully autonomous, self-driving vehicles should also come into play when valuing the company, he said, expressing confidence in the EV maker’s ability to do so.

“If somebody doesn't believe Tesla is going to solve autonomy, I think they should not be an investor in the company,” Musk said in response to analyst questions during the Tuesday earnings call.

As Tesla attempts to navigate through these challenges, Musk’s leadership not only of Tesla but of his multiple other companies, such as social media company X, formerly Twitter, has also fallen under a spotlight.

“Maybe you can just talk about where your heart is at in terms of your interests and do you expect to lessen your involvement with Tesla at any point over the next three years?” Toni Sacconaghi, senior research analyst for Bernstein, asked the CEO during the earnings call.

“Tesla constitutes a majority of my work time and I work pretty much every day of the week,” Musk said in response. “It’s rare for me to take a Sunday afternoon. So I’m going to make sure Tesla is quite prosperous.”