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Tesla's price cuts hammered its profit margins last quarter. Aly Song/Reuters

Tesladisappointed its shareholders on April 19 when it revealed how its aggressive price cuts have affected its business.

The carmaker startedslashing the price of its Model Y SUV and Model 3 sedan in January and its latest earnings report showed that profit margins have fallen dramatically over the past quarter.

In a call with investors, CEO Elon Musk hinted that he'll push ahead with the strategy in a bid to lure customers away from traditional automakers and EV rivals.

But analysts have warned that Tesla may have to sacrifice its short-term financials to boost its market share and it might be too early to say whether the price war will help or backfire.

Tesla has cut prices six times this year.

The entry-level Model 3 now costs less than $40,000, down from $62,990 at the start of the year. The Model S and Model X are also 20% cheaper than they were at the beginning of 2023, even after Tesla raised US prices Thursday.

But these cuts have eaten into Tesla's profit margins. In Wednesday's earnings report, the company disclosed that its profit had plunged 24% year-on-year to just over $2.5 billion.

Shares fell nearly 10% at Thursday's market close, wiping out $56 billion worth of valuation a figure higher than Ford's market cap.

Wall Street had anticipated that margins would fall but traders were likely surprised at just how big the drop was, according to Morningstar equity analyst Seth Goldstein.

"The extent of margin declines was below what I was expecting and what the market was expecting too," he told Insider. "That's why we saw the stock sell-off, it was a reaction to that."

In Wednesday's earnings call, Musk told investors that the company will put sales growth ahead of profit in a weak economy.

"We've taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and a higher margin," he said.

Musk's willingness to pursue a strategy that is hitting profits suggests he might be eyeing a market occupied by legacy automakers. Ford was one of the only traditional automakers to respond to Tesla's cuts in January, dropping the price of its Mustang Mach-E, but it has not made further reductions.

While price competition isn't uncommon in the auto industry, car companies might struggle to match the size of Tesla's cuts without hurting their own profit margins.

"I think legacy automakers are left scrambling right now do they cut prices, or do they sell fewer EVs at a higher price to preserve profits? They're faced with a choice between cutting prices or hurting profits even more. That makes for an interesting scenario in terms of how they respond," Goldstein said.

Tesla's margins fell last quarter because price cuts ate away at revenue, butmargins could rebound if Musk manages to cut costs.

Musk and other executives said Tesla would bring in innovative manufacturing techniques and use smaller factories in a presentation on March 1. The EV maker is also rumored to be developing a cheaper model, expected to cost around $25,000.

"They're passing these cost savings that they're making on to the consumer, whereas I think historically that would just be margin that would go into the books of the automaker," Caspar Rawles at Benchmark Mineral Intelligence, a price-reporting agency, previously told Insider.

"But Elon alluded that they have a mandate to try and maintain a low sticker price for these vehicles, which obviously has been extremely challenging over the last couple of years with all of the supply chain problems that they faced," he added.

By slashing prices and aggressively cutting costs, Tesla is choosing to suffer short-term profit pain in exchange for growing its longer-term market share but it will be a while before Musk can say whether that was the correct approach.

"Right now, it looks like the company's competitive position is being prioritized over protecting profitability," AJ Bell investment director Russ Mould said Thursday. "Only time will tell if that is the right move."

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Cheaper Teslas are hurting profits, but Musk still wants to cut prices - Business Insider

Elon Musk is years behind on his ambition to render Tesla Inc.s cars fully autonomous. Hes now saying in no uncertain terms that hes willing to bet the companys profit margins on making it happen.

Musk said on a conference call last week that Tesla has the wherewithal to sell cars at zero profit and then earn immense sums later off driverless software.

The trouble with that for investors? His predictions since at least 2019 that autonomous Teslas are just around the corner havent panned out.

Were the only ones making cars that technically we could sell for zero profit for now, and then yield actually tremendous economics in the future through autonomy, Musk said April 19. Im not sure how many of you will appreciate the profundity of what Ive just said, but it is extremely significant.

The challenge Musk has had turning driverless visions into reality isnt stopping him from going forward with markdowns that threaten to set off a price war.

The Austin, Texas-based company has lowered the cost of its top-selling Model Y 29 percent in the span of just a few months. Thats dented the companys margins and spooked investors concerned about deteriorating profits.

Read more:

Elon Musk is willing to bet Tesla's profits on a driverless dream - Automotive News

A group of Tesla investors asked CEO Elon Musk for more commitment to the electric vehicle (EV) company in an open letter published last week, specifically requesting that he spend less time posting derogatory tweets. The letter also urged Musk to address accusations of a toxic work environment at Tesla and concerns about future profitability.

The self-described progressive investor group demanded a plan to overhaul the composition of the board, including the removal of directors close to Musk, and a policy that would limit his commitments to his other companies, SpaceX, Neuralink, and X Corp (formerly known as Twitter).

We each initially added Tesla to our portfolios because we saw Tesla as a true leader in producing products and services essential for our transition to a sustainable and green economy, the letter said. Over time, however, we have grown increasingly concerned with governance and leadership issues at the company.

The investors cited Teslas broader culture of being above the law, accusing Musk of ignoring investigations into its autopilot system while compulsively tweeting at anyone who criticizes him.

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The letter was signed by a coalition including the New York City Comptrollers Office and Amalgamated Bank, which is union-owned. Together, the group owns $1.5 billion in Tesla shares, less than 1% of the companys total value.

Musk currently takes no salary for his role as CEO of Tesla after cashing outhis stock options from a 2018 package earlier this year, fueling speculation that the EV company isnt at the top of his list of priorities.

In the past week alone, Musk launched a rocket, accused Microsoft of illegally using Twitter data, slashed the prices for two Tesla models, and announced the development of his own AI chatbot. He still seemingly had enough time to take away blue checks from celebrities on Twitter, before giving them back when his plan backfired.

This all happened during a week that Tesla reported dwindling quarterly earnings, including a 24% plunge in net income. The company also reported thatdespite boosting car deliveries by more than a thirdits operating margin had fallen from 19.2% last year to 11.4% now.

During the earnings call, Musk said hes focused on his grand vision for Tesla, not on creating profit, telling investors that the company is the only one making cars that technically could sell for zero profits now and yield tremendous profits in future through autonomy.

This strategy falls in line with his recent grandiose plans to turn Twitter into the app for everything and bypass philosophers to create an epistemic AI chatbot that focuses on maximum truth-seeking. It isnt difficult to imagine why investors are concerned.

Tesla slashed prices for a sixth time this year to alleviate the loss of Bidens EV tax credits

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Tesla investors are worried Elon Musk enjoys operating "above the law" - Quartz

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Hours after Fox News and the Fox Corporation settled a massive defamation lawsuit minutes before a trial started, Tucker Carlson prepared his viewers for what he characterised as an imminent race war provoked by Democratic officials.

A few days later, while hovering over an open pizza box, he closed out his Friday show with a plug for his 25-minute special in his line of Tucker Carlson Originals winking at a far-right conspiracy theory that world leaders are forcing people to eat bugs.

Well be back on Monday, said Carlson, moments before taking another bite. In the meantime, have the best weekend with the ones that you love, and well see you then.

Those would be his last words on what would be his last appearance on Fox News, the home for his massively influential and most-watched programme on the nations most-watched cable news network.

On Monday morning, Fox News CEO Suzanne Scott informed Carlson he was going off air. He lost access to his email account. A four-sentence press release announced Fox agreed to part ways with Carlson. A figurehead for far-right commentary and conspiracy theories beamed into airports, military bases and homes and businesses across America suddenly wouldnt be.

His surprise departure follows a chaotic week for the network in the aftermath of its $787m settlement with Dominion Voting Systems, closing out more than two years of litigation only after hundreds of pages of court documents revealed embarrassing behind-the-scenes statements among Fox executives, producers and its top stars.

Carlson and his programme are also central to a lawsuit from a former producer alleging a toxic workplace where truth remains a fugitive and where women are routinely verbally violated by a poisonous and entrenched patriarchy.

Abby Grossberg, who was terminated for her role as a senior producer at Tucker Carlson Tonight while in the middle of litigation against the network, said in a statement that his exit is a step towards accountability.

This is some justice for the American people and for Fox News viewers whove been manipulated and lied to for years, all in an attempt to boost the channels ratings and revenue, she added.

The announcement of Carlsons departure also came after 60 Minutes profiled Ray Epps, a Trump supporter who was in Washington DC on 6 January, 2021, but has become a maligned figure among far-right conspiracy theorists and election deniers who believe Mr Epps is a federal plant who incited the riot that brought violence into the halls of Congress.

Lawyers for Mr Epps, whose life and family has been upended by the allegations, wrote to Fox and Carlson demanding a retraction for the false and defamatory statements about him.

Dominion accused Fox News Network and its Fox Corporation leadership of amplifying false and damaging claims about the company in the aftermath of the 2020 presidential election, when conspiracy theories surrounding the election and its outcome swirled throughout Republican politics, amplified by Donald Trump and his allies, and across right-wing media, including Foxs far-right competitors.

On 19 April, attorneys for Fox and Dominion scrambled towards a settlement before a high-profile six-week trial in Wilmington, Delaware, where Fox leadership including Rupert Murdoch and on-air personalities were expected to testify. Only after 12 jurors and 12 alternates were sworn in did the two parties announce that the case was settled.

Meanwhile, outside the courthouse, a truck with the words TUCKER CARLSON KNEW circled around the building for two days.

The night that Dominions legal team announced the largest libel settlement in US history and Fox published a statement acknowledging the Courts rulings finding certain claims about Dominion to be false, Carlson returned to his primetime programme, making no mention of one of the biggest media stories of the century.

What ended up being Carlsons final week on the network relied on familiar themes from a nightly lineup that has grown increasingly more extreme in recent years, tilting at far-right fringe conspiracy theories, racism and anti-trans attacks.

The night of the Dominion settlement, he brought on Heather Mac Donald, author of When Race Trumps Merit: How the Pursuit of Equity Sacrifices Excellence, Destroys Beauty and Threatens Lives. Today were seeing the change that Barack Obama brought to America, said Carlson, introducing his guest.

Carlson also aired a second part of his interview with Elon Musk, who shared his dubious warnings about global collapse due to allegedly low birth rates, which he appeared to blame on access to birth control and abortion. Civilizations gonna crumble, he said.

On what would be his final broadcast on 21 April, Carlson downplayed the well-documented impacts of a racially biased housing market with a critical segment against the Biden administrations plan for a home appraisal workforce.

The only job training this administration has gotten behind in the last two years is getting Black people to sell more weed in the cities, literally, Carlson said.

He also compared gender-affirming care for transgender people to Heavens Gate cult members, among several recent segments devoted to raising specious arguments about LGBT+ people, on a network consumed by anti-trans activism.

It sounds familiar. Heavens Gate is proof that when religious fanatics command you to surrender your gender and become androgynous, castrate yourself and your children, its probably not gonna end well.

In what were his programmes final moments, framed by several pizza boxes across his desk while holding a slice, he promoted Let Them Eat Bugs, a special described as an investigation into environmentalists pushing people to eat bugs.

Court filings show that Carlson appeared to reject debunked claims about Dominion and allegations of vote manipulation, while at the same time fearing drops in Fox stock prices and viewership if network hosts and reporters publicly admitted that there is no evidence to support false election claims.

Carlson privately raged over the networks correct prediction that Joe Biden won the state of Arizona, which enraged Trumps campaign and far-right figures

We worked really hard to build what we have. Those f*****s are destroying our credibility. It enrages me, he wrote to his producer on 5 November, according to Dominions filings. What [Trumps] good at is destroying things. Hes the undisputed world champion of that. He could easily destroy us If we play it wrong.

Five days later, he told his viewers that voter fraud happened, and we can prove it. His segment about dead Americans casting ballots prompted a correction.

On 19 November, Carlson ended his broadcast by suggesting that Trump-connected Sidney Powell should publicly reveal the evidence for her baseless claims about widespread voter fraud and manipulation that fuelled conspiracy theories about Dominion and the 2020 election. We are certainly hopeful that she will, he added.

The following night, he told his viewers that if Powell could prove mass fraud that manipulated the outcome, no one will be more grateful for that than us.

But just four days earlier, he told a producer that Sidney Powell is lying. F****ing b****.

Sidney Powell is lying by the way. caught her. Its insane, he later told Laura Ingraham.

The lawsuit from Ms Grossberg, formerly a producer on Carlsons programme, alleges that not only did Foxs legal team coerce her testimony in the Dominion case, but she also paints a disturbing work environment bloated by systemic chauvinism that repeatedly undermined her decisions and retaliated against her when she complained.

Ultimately, feeling ignored and unprotected by Fox News, and suffering from severe anxiety due to the unlawful treatment she received from her male supervisors and colleagues, Ms Greenberg sought medical leave as recommended to her by a therapist, according to her complaint.

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Tucker Carlsons final days at Fox News: Dominion bombshells, Elon Musk and eating bugs - The Independent

You know that supposed Musk family-owned emerald mine that Elon has recently been saying is just a rumor, despite previously saying on record that the mine definitely existed?

Well, according to Errol Musk, the unsurprisingly eccentric and in one major way, extremely creepy father of Elon, the mine definitely exists. And come to think of it, he'll take that Dogecoin, thanks!

"When I read that, I wondered, 'Can I enter, because I can prove it existed," Errol told The Sun in a new interview, referring to his son's Dogecoin tweet. "Elon knows it's true. All the kids know about it."

"Elon saw them (the emeralds) at our house," he added. "He knew I was selling them."

The emerald mine is a particularly strange piece of Muskian lore not strange due to the mine's existence per se, but because of Elon's more recent decision to suddenly and completely backtrack on his previous claims.

Per his new Sun interview, however, Errol seems intent on setting the record straight, explaining to the tabloid that he happened upon the Italian owner of the mine at a Zambian airstrip that said Italian also owned. The Italian apparently told Errol that he paid Zambian locals to dig for the gems, and Errol decided to go into business with the gentleman (you know, as one does.)

"What Elon is saying is that there was no formal mine. It was a rock formation protruding from the ground in the middle of nowhere," Errol told the tabloid, noting that he kept his involvement with the operation "under the table."

"There was no mining company. There are no signed agreements or financial statements," he explained. "No one owned anything. The deal was done on a handshake with the Italian man at a time when Zambia was a free for all."

Errol went as far as to say that emerald money paid for his son's move to the US, where Elon would go on to attend the University of Pennsylvania's Wharton Business School on scholarship with, apparently, emerald-generated cash in his pocket for living expenses.In other words, according to the senior Musk, it sounds a lot like Elon's entire road to wealth and fame beyond South Africa was paved with Zambian emeralds.

"During that time," said Errol, speaking to Elon's college years, "I managed to send money I made from emerald sales to him and [Elon's brother, Kimbal Musk] for living expenses."

Look, Errol isn't at all a capital Good Dude, and the Musk family is seemingly pretty strained. But somehow, "I met a random Italian on an airstrip and got into emerald mining from there" seems to check out for these folks, and some clarity on behalf of the world's second-richest man who doesn't exactly have the soundest relationship to truth himself would be welcome.

And as for why Errol thinks his son won't just admit that the mine was real?

"Elon's main concern is not to appear to be a 'trust fund kid' who got everything given to him on a plate," Errol told the tabloid, though did add that the belief that his son was born with a silver or, well, emerald spoon in his mouth "isn't true."

"Elon took risks and worked like blazes to be where he is today. The emeralds helped us through a very trying time in South Africa, when people were fleeing the country in droves, including his mother's whole family, and earning opportunities were at an all-time low," he continued. "That's all."

More on Elon's emerald denial: Elon Musk Now Denies That His Family's Emerald Mine Existed, In Spite of Previously Bragging About It

See original here:

Elon Musk's Dad Says His Son's Whole Career Was Funded by That Emerald Mine - Futurism