Tesla is facing perhaps its most pivotal moment in recent history. The automaker’s sales are slipping, investor confidence is dwindling and political pressure coming from within has stained the automaker’s reputation. With its first earnings call of the year coming today, Tesla has a lot to answer for. I hope everyone has their popcorn ready.
Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Today, Tesla is expected to face one of its most difficult earnings calls in years, investors are calling for Musk to return from Washington in Tesla’s “code red” moment and Volkswagen is reportedly negotiating tariff terms with Trump’s team. Let’s jump in.
30%: Brace For Tesla Earnings Day
Photo by: InsideEVs
Today is Tesla’s quarterly earnings call, which means that Tesla investors, fans, and those with a bone to pick will all tune into Tesla’s livestream once Wall Street closes trading to see just how Tesla performed for the quarter. And if it’s anything like analysts have predicted, Tesla could be publishing some rather unpleasant numbers this afternoon.
For the first time since Tesla became profitable, it reported a year-over-year delivery decline. It’s not a paper cut, either. In fact, the brand’s global volume is down 13% YOY at a time when EV sales in the U.S. alone are up 11.4%. Obviously, that doesn’t bode well with investors, as Tesla shares have already dropped more than 40% since the beginning of the year and continued to slide on Monday ahead of the call.
Analysts are circling like buzzards. Barclays warns that profit margins are in for a bruising as Tesla has essentially put virtual “cash on the hood” of its cars to move them, whether that be Cybertruck discounts or subsidized financing offers. Wells Fargo is warning of weak demand in two of Tesla’s most important markets: the U.S. and China. It props up its theory by citing Tesla’s 0% APR offerings and the immediate availability of its refreshed Model Y in key markets.
Deutsche Bank is joining in the fun, too, calling out weak demand as a reason to not only cut annual delivery expectations but also Tesla’s stock price target. And then there’s JPMorgan which says Tesla has experienced “unprecedented brand damage” at the hands of its CEO.
“[Tesla’s sales report] causes us to think that—if anything—we may have underestimated the degree of consumer reaction,” wrote JPMorgan analyst Ryan Brinkman. The firm comes in with the lowest Tesla price target at a sobering $120 per share.
All of that said, what are investors looking to get out of Tesla’s earnings call?
Taking a look at the automaker’s Say site, which tracks questions from verified Tesla investors, folks want to know what’s going on with Tesla’s pledged “more affordable models” (which may now be in trouble thanks to tariffs). They’re also asking about the robotaxi timeline and how Tesla plans to handle hardware upgrades to its older vehicles since, you know, Tesla promised that all of its cars had the computing power necessary for Full Self-Driving years ago, only to recently find out that the current hardware stack won’t cut it. And, perhaps most importantly, if Tesla “experienced any meaningful changes” in its order rate thanks to “brand damage”.
Today’s call needs to be nothing short of inspirational if the company hopes to turn things around. Otherwise, Tesla could continue to see its stock price nosedive along with investor confidence.
60%: It’s “Code Red” If Musk Doesn’t Get Back To Being Tesla’s CEO Full-Time
Photo by: White House
Musk has been spending a lot of time in the limelight of the U.S. political scene, but Wall Street wants him back in the driver’s seat (of Tesla, that is).
On Sunday, Wedbush Securities analyst Dan Ives told clients that Musk’s moonlighting gig in the Department of Government Efficiency (DOGE) is doing some serious damage to Tesla—that’s equal parts damage to the brand and the business. And with Q1 earnings looming, Ives said that the company is facing a full-on “code red” moment if Musk doesn’t step away from Washington.
Here are a few excerpts of the note, as told by Bloomberg:
“Musk needs to leave the government, take a major step back on DOGE, and get back to being CEO of Tesla full-time,” Ives wrote in a report to clients Sunday. “Tesla is Musk and Musk is Tesla… and anyone that thinks the brand damage Musk has inflicted is not a real thing, spend some time speaking to car buyers in the US, Europe, and Asia. You will think differently after those discussions.”
“Tesla has unfortunately become a political symbol globally of the Trump Administration/DOGE,” wrote Ives. He then ticked off several points: Tesla’s stock has been crushed since inauguration, the company’s first-quarter delivery numbers were terrible and protests against Tesla continue. Tesla faces “potentially 15%-20% permanent demand destruction for future Tesla buyers due to the brand damage Musk has created with DOGE,” according to Ives.
Obviously Ives’ focus is Tesla’s stock performance, and that hasn’t been great over the past few months. Since mid-December, the stock value has plummeted more than 50%. At the center of the performance problem sits one person: Musk.
With softening sales and politically driven pushback against the brand globally, analysts are looking at Musk as more of a salesman for rival brands than his own company. Whether or not Telsa can break away from that stigma (even if Musk leaves politics behind) is an unknown, but it certainly faces an uphill battle for as long as Musk remains at the helm.
But to Ives’ point, “Tesla is Musk and Musk is Tesla.” It’s unlikely that Tesla would choose another CEO to run the show, as Musk’s presence is intrinsically linked to the brand’s value (even if he’s committed to several other companies and politics at the same time). But at the same time, Tesla can’t continue to navigate the same geopolitical path without growing consequences.
Technically Musk’s role as a special government employee expires after 130 days, which puts him back in Texas full-time by the end of May. But whether or not his attention will actually be there is anyone’s guess.
“We view this as a fork in the road time: if Musk leaves the White House there will be permanent brand damage, but Tesla will have its most important asset and strategic thinker back as full-time CEO,” wrote Ives. “If Musk chooses to stay with the Trump White House, it could change the future of Tesla/brand damage will grow.”
90%: Volkswagen Group Could Shift Production To U.S. Over Tariffs
Photo by: Audi
Like most automakers, Volkswagen was surprised to hear that the Trump administration planned to extend the 25% auto tariffs beyond Canada and Mexico. The group immediately jumped into planning mode, figuring out how to deal with what is essentially an expensive thundercloud over the entire industry. CEO Oliver Blume is hoping that some flattery and some old-fashioned negotiation will help to dictate some favorable terms for the brand.
A report from German newspaper Frankfurter Allgemeine Zeitung says that Volkswagen Group has begun negotiating directly with the Trump administration on how to alleviate some of the looming tariff concerns. One possible concession that was reportedly floated was building Audis in America—meaning that Vorsprung durch Technik could soon have a bit of an American twang to it for some models.
As reported by Handelsblatt (translated):
Due to the new US import tariffs on cars in the USA, the Volkswagen Group is negotiating about a possible concession with the administration of President Donald Trump. CEO Oliver Blume stated in an interview with the “Frankfurter Allgemeine Zeitung” (FAZ) envisages production of the Audi brand in the USA.
“We have a forward-looking strategy with exciting project approaches, tailored and attractive to the US market. We’re bringing this to bear. Constructive discussions with the US government are currently underway,” Blume said.
The CEO told the newspaper that he sees industry as part of the solution to the tariff dispute. “Our greatest leverage is to invest in regions around the world, create jobs, and establish partnerships.” North America is one of the most important growth regions for the VW Group, Blume said. Volkswagen wants to “do everything possible” to act as a reliable investor and partner in the USA.
Currently, Volkswagen Group only sells imported Audis in the U.S. Sure, other vehicles across the VW lineup are built in North America. The Atlas and ID4 hail from Chattanooga, Tennessee, for example, while the Jetta, Taos, and Tiguan are built at the company’s plant in Puebla, Mexico. But this means around two-thirds of VW’s umbrella is still imported into the States, which puts the Germans at a bit of a disadvantage compared to other automakers that already have a heavy U.S. manufacturing footprint.
That could change, though:
“We want to continue expanding. The Volkswagen brand has opportunities in its product portfolio,” said Blume. “For Audi, US production would be a development step within our strategy.”
It’s not clear what Blume’s ask is by floating domesticating Audi’s supply. Perhaps it’s an exemption of tariffs for VW’s brand, or at least a delay while the automaker looks to move production of some models to the U.S. Porsche, however, won’t be getting a U.S. plant. Blume noted that the luxury marque’s low-volume sales aren’t enough to warrant a domestic presence, meaning that Porsche buyers will likely end up paying a premium should it be left out of any negotiations.
Trump recently suggested that automakers might get some temporary breathing room while they work to figure out just how to Americanize their production. But as any seasoned industry professional will tell you, reshuffling a global supply chain and moving production to an entirely different country isn’t a weekend project. Hell, it’s not even likely something that an automaker wants to undergo during a product’s existing lifecycle. But prices? Those can spike overnight at just the mention of the word “tariff.”
100%: What Would It Take For You To Consider Buying A Tesla Right Now?
Photo by: InsideEVs
Tesla competition is at its fiercest point in history. Hell, the brand has competition everywhere, and EV options are constantly growing across all segments that the brand currently competes in.
That competition is having a very real effect on the brand. Telsa’s market share is collapsing across the globe, and its deliveries are slipping all while EV adoption increases at a significant rate. In layman’s terms: people are buying non-Tesla EVs faster than ever.
Let me welcome you to my salesman’s desk for a second and ask that age-old dealership question: what would it take to put you in the driver’s seat of a new Tesla and drive it home today? A newer, less expensive model? A change in the company’s politically charged leader? Jump into the comments and let me know.
