Quiver Quantitative - Elon Musk's Tesla (NASDAQ:TSLA) (PFE (NYSE:PFE)) is confronting challenges as rapid growth meets an unstable global economy. After numerous strategic price reductions, Tesla's profit margins have substantially dwindled, and there are considerations to ruthlessly cut internal costs. Musk has expressed concerns about the unpredictable economic landscape, even contemplating a delay in the inauguration of Tesla's new factory in Mexico. Despite these uncertainties, Musk portrays Tesla as a resilient entity, stating, “We’re not going to sink, but even a great ship in a storm has challenges.”
Musk's acknowledgment of the challenges ahead was emphasized when Tesla revealed its weaker-than-expected third-quarter earnings. The roll-out of the Cybertruck, Tesla’s new electric pick-up, has also faced delays, with the first truck expected to be handed over about two years behind schedule. Musk admitted to analysts about the difficulties in launching such unique products, hinting at the challenges in achieving volume and profitability.
The company's shares took a hit, dropping by over 4% following Musk's cautious outlook, even though Tesla's stock had almost doubled since the beginning of the year. The quarterly report highlighted that Tesla missed both its earnings and sales projections. The automotive gross margin, a key metric for investors, also declined, falling below expectations. The company, known for its frequent price cuts this year, aims to make its vehicles more affordable in light of the global economic pressures.
Nevertheless, Tesla is projecting a promising future. Despite the possibility of delaying the Mexico factory, the company has assured stakeholders of its commitment to produce and deliver approximately 1.8 million vehicles in the current year, marking a record. To achieve this ambitious target, Tesla would need a significant surge in its fourth-quarter production and deliveries.
This article was originally published on Quiver Quantitative