Elon Musk braces for bad Tesla results as EV price war rages

Those obligations presumably include being around to deal with the fallout of tomorrow’s Tesla quarterly results, which are expected to be the company’s worst in seven years, and shareholders’ understandable desire to know whether they should still be holding their breath for the Model 2—Tesla’s long-awaited budget EV, which was supposed to have been the culmination of the firm’s long-term mass-market strategy.

“If they stopped that, that is investment-thesis–changing,” Tesla investor David Baron warned last week, following rumors that Musk would pause plans for the $25,000 car in favor of a push for autonomous robo-taxis. “It would be a disaster of epic proportions,” added noted Tesla bull Dan Ives. There are a lot of investor nerves for Musk to calm, especially if he wants to revive his struck-down pay package—worth $56 billion—at Tesla’s annual meeting in a couple of months.

Tesla’s moribund share price has dropped 17% in the past week alone, thanks to a flood of bad news that’s included the laying off of a tenth of Tesla’s workforce, plus the humiliating recall of every shipped Cybertruck, to fix a poorly designed accelerator pedal that potentially turns the vehicle into what InsideEVs’ Rob Stumpf memorably described as “a 6,800-pound land missile.”

Also not helping matters: Musk’s decision over the weekend to slash prices of Teslas and their improperly named “Full Self-Driving” software, which is clearly an attempt to revive flagging sales. That decision has already had knock-on effects in China, prompting rival Li Auto to further discount its EVs and even provide rebates to those who recently bought them—thus knocking Li Auto’s already-struggling share price by over 8%. Chinese market leader BYD has already slashed its prices, sending its Seagull hatchback below the $10,000 mark.

According to Reuters, China’s state planners see the price war further intensifying this year. Tesla certainly isn’t the only one suffering here.

On the one hand, the planet needs these price cuts. It happens to be Earth Day today, and the electrification of transport is one of the few tangible ways in which technology is helping rather than hindering the battle against global heating. More EVs equals fewer carbon emissions, and lowering prices is one way to aid this essential transition.

But the fact remains that EV demand is currently lacking, at least compared with what automakers were hoping for. The price war is just one symptom of that situation. Another can be found in the decision by South Korean metals refiner Ecopro Innovation to cut production of lithium hydroxide, a critical material used in batteries, by a tenth. Bloomberg reported that move today, noting that CEO Anthony Kim only sees a rebound happening in the second quarter of next year.

So buckle up for another bumpy 12 months—and, if you’re a Cybertruck driver, get your ride to a Tesla dealer who can fix that accelerator pedal.

David Meyer

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NEWSWORTHY

U.S. Surveillance expansion. The dramatic expansion of U.S. Intelligence’s ability to spy on people—including Americans in many cases—under the Foreign Intelligence Surveillance Act, is now a done deal. As CBS News reports, at the start of the weekend the Senate passed and President Joe Biden signed a reauthorization of FISA’s Section 702, which already allowed agencies such as the NSA and FBI to compel Big Tech to aid in their spying efforts, without a warrant. But under the new reauthorization law, they can do the same with data center operators, commercial landlords, and almost any other business that might be able to help them access the communications of a target and their correspondents.

Salesforce drops Informatica buy. Salesforce has reportedly abandoned a plan to buy Informatica, the data-management software firm, for around $10 billion. According to Reuters, the talks had been at an advanced stage earlier this month, but the two sides failed to agree on terms.

Google antitrust in Japan. Google abused its power to stop Yahoo Japan from being able to compete in targeted search ads, the country’s Fair Trade Commission said today. According to Bloomberg, the antitrust regulator got Google to change its practices and didn’t levy any penalty—though it will monitor the situation and may reopen the investigation if Google doesn’t play nice as promised.

ON OUR FEED

“Waiting, even a bit, will give us more mature options, avoidance of early adopter costs, greater choice, and more solid case studies.”

—Jay Ferro, chief information, technology, and product officer at clinical research data firm Clario, is one of the CIOs telling the Wall Street Journal that they’re cautiously watching the “AI PC” trend that the PC industry is hoping to ignite this year.

IN CASE YOU MISSED IT

The ghosts of ‘Wintel’: What leaders can learn from the diverging paths that made Microsoft a $3 trillion powerhouse and flatlined Intel, by Geoff Colvin

TikTok tells U.S. Staff it will sue to stop bill forcing sale of platform—it’s a ‘clear violation’ of First Amendment rights of 170M American users, by Bloomberg

TikTok eyes removal of exec in charge of placating U.S. Government after House passes divest-or-ban bill, by Bloomberg

At least 5 companies under Elon Musk’s control billed each other around $9 million in expenses, by Amanda Gerut

After being overtaken by BYD, Volkswagen meets with doubtful investors to persuade them of turnaround plan, by Bloomberg

BEFORE YOU GO

Cops vs. Encryption. The Crypto Wars (as in cryptography, the OG “crypto”) really will never end. The latest development is Europol and Europe’s police chiefs yesterday issuing a joint declaration slamming Big Tech—Meta in particular—for rolling out end-to-end encryption on their services. “We do not accept that there need be a binary choice between cybersecurity or privacy on the one hand and public safety on the other,” the statement reads. “Absolutism on either side is not helpful. Our view is that technical solutions do exist; they simply require flexibility from industry as well as from governments.”