Tesla (NASDAQ:TSLA) is gearing up to announce its Q1 earnings after the market closes tomorrow, with investors eagerly awaiting insights into the company’s performance. Amidst trading at its 52-week lows, Tesla’s stock stands as the second-worst performer in the S&P 500 Index for 2024, raising concerns among market participants.

The upcoming earnings call holds significant importance for Tesla as it grapples with various challenges. Can Elon Musk address investor concerns following previous earnings calls that failed to assuage apprehensions? Let’s delve into what the markets can anticipate from Tesla’s Q1 earnings release.

Q1 Earnings Expectations

Analysts anticipate Tesla to report Q1 revenues of $22.3 billion, reflecting a year-over-year decline of 4.4%. This expected drop in revenues aligns with the 8.5% year-over-year decrease in deliveries during the quarter, marking the first such decline since 2020.

Given Tesla’s multiple price cuts over the past year, it wouldn’t be surprising if revenues fall below consensus estimates. These price reductions are anticipated to exert further pressure on Tesla’s profits, with analysts projecting a 52% year-over-year decline in earnings for the quarter.

Impact of EV Price War

The industry-wide price war has adversely affected profits, with Ford (NYSE:F) expecting its 2024 EV losses to widen. Similarly, General Motors (NYSE:GM) has scaled back its ambitious EV plans. Tesla, too, has faced criticism for recent earnings calls described as “mini disaster” and “train wreck horror shows,” largely due to vague disclosures.

Key Questions for Tesla

During the Q1 earnings call, markets will keenly await Tesla’s responses to critical inquiries:

Trajectory of EV Transition: Analysts seek insights into Tesla’s perspective on the medium-term trajectory of the EV industry amidst slower-than-expected adoption rates.

New Plants: With EV sales decelerating, Tesla may reconsider its plans for 20 Gigafactories worldwide and provide updates on rumored facilities in India and Mexico.

Low-cost Platform: Investors await clarity on Tesla’s low-cost model amid scarce details.

China Competition: Musk’s comments on competing in China’s increasingly competitive EV market are anticipated.

Margin Erosion: Concerns persist over Tesla’s pricing strategy and margin erosion following frequent price cuts.

Cybertruck Recall: Updates on the Cybertruck recall and its impact on manufacturing efficiency are expected.

Robotaxis and Autonomous Driving: Insights into Tesla’s robotaxi unveiling and progress toward full autonomy are sought.

New AI Products: Updates on Dojo supercomputer and Optimus humanoid, considered growth drivers, are awaited.

Musk’s Compensation: Details on Musk’s compensation, a longstanding issue, are anticipated.

The upcoming earnings call holds immense significance for Tesla amidst declining volumes, margins, and stock prices. As even former bulls grow apprehensive, investors await Musk’s responses to critical questions, hoping for transparency and clarity in addressing concerns. Will Tesla deliver satisfactory answers or continue its trend of evasive responses? The outcome remains to be seen.

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