Tesla Earnings Miss the First Quarter Mark

Elon Musk has been in the news a lot lately. Most of the headlines are not particularly endorsing. He’s been all over the place; Joe Rogan, twitter. His public persona has definitely taken a curious turn. 

The man seems a bit insane, yes, but most geniuses are. He’s a tough nut to crack, but you want to see him succeed. Most of what he’s trying to do would revolutionize the auto industry, solving many of its problems and shortcomings. 

But it seems like Elon’s all over the place. Maybe his priorities are a little scattered? Maybe he needs to scale the ambition down and focus on one problem at a time? 

Most recently, Tesla earnings were well below what they were aiming for in the first quarter of 2019. Sales fell 61% in the United States and 31% worldwide. Stocks fell 8% in price. Here’s why. 

Tesla Earnings Based on Direct-to-Consumer Model

Over the past few years, there’s been an increase in demand for electronic vehicles. Tesla was on to something and other auto companies found out.

Most of these companies are still operating with the old method of car sales- having inventory at their dealerships and servicing vehicles there. 

Progress is difficult. People are hesitant to change. Tesla’s first-quarter earnings show that. 

Lack of Accessibility Hurting Tesla Earnings

We know, Tesla is the wave of the future.

But Toyotas and Hondas are everywhere. Thus, you can buy them everywhere. You can service them anywhere. Toyota has over 3,000 dealerships nationwide. Tesla has 80. 

That’s not even taking into account the problem of charging your Tesla over long distances. You save money on gas long term with Tesla. But if you’re traveling cross country, you have to deal with the inconvenience of periodically spending 30 minutes to charge it.

Tesla’s innovative systems map out the route for you, but it’s still a pain. A recent cut in cost and decrease of locations could make accessibility even more problematic. 

Instability Hurting Tesla Earnings 

Tesla’s is dealing with what some would call a leadership crisis. Others are suggesting that Tesla’s leadership is in the best position it’s ever been.

Musk is clearly having control issues. More concerns have mounted from Musk misleading investors through his tweets, and the SEC is trying to hold Tesla in contempt for flouting other settlements. 

Musk is also shaking up Tesla’s board of directors. Long term, Musk says this will benefit Tesla, but short term it’s clearly scaring people. 

We don’t have an inside eye as to whether or not there are infrastructural leadership problems at Tesla. We do, however, know that Musk is the top dog and it’s creating tension.

Federal Tax Credit Halved 

One of the most enticing aspects of buying a Tesla is the tax credit you receive. 

On January 1st of this year, that tax credit halved. Musk warned shareholders that sales would take a hit because of it. 

It will be interesting to see what happens in the second half of 2019 as the tax credit continues to reduce to $1875. 

Musk Is His Own Worst (Or Best), Enemy (Friend)

There’s no such thing as bad publicity, right? At this point, that might be what Musk is thinking. His tweets have provoked concern. His carelessness on Joe Rogan shocked stockholders.

Maybe that affected sales in the first quarter. Maybe it didn’t. What’s clear is that Musk is ruffling some feathers.

Short term, that seems to have detrimental consequences. Long term it can have many benefits. 

This strange publicity has become an ongoing trend with Musk. His lack of compromise with opposing forces and his commitment to his own vision is responsible for both the best and worst aspects of Tesla. 

Is this dip in sales a temporary occurrence or something to be worried about? You wonder whether Musk is even asking that question. His unwavering confidence suggests not. 

Tesla Model 3 was 2018’s Best Selling Luxury Car

Some context is needed here. We can’t represent one side of the story without the other. Let’s not forget that just last year, Tesla sales were performing well. Tesla’s Model 3 ranked the #11 best selling car in terms of revenue.

Business moves in cycles. So we shouldn’t be shocked at the downturn. There’s also a simpler reason for Tesla to stay its hand from the panic button. The first quarter is usually the lowest for auto sales.

Is Tesla’s First Quarter Earnings Cause for Concern?

The short answer? No one knows. There are a lot of investors that say this is the time to pull out of Tesla. There are others that say this is the prime time to invest.

What’s clear is that Tesla is wading through murky water. That’s about all that’s clear.

Musk’s odd behavior, controlling tendencies, and penchant for hardheadedness are concerning. Cost cutting and glaring distribution problems are as well. 

We, for one, believe in Musk. Why shouldn’t we? He’s come this far. We would like to see him focus a little more on Tesla earnings rather than going to Mars. But who are we to dictate what he can and can’t do? It’s Elon Musk. He can do anything…right? 

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