Tesla is under intense investor scrutiny as it navigates delays in launching an affordable electric vehicle (EV) and its robotaxi service, while contending with declining sales and reputational challenges. The company has hinted at a significant update during its upcoming earnings webcast, fueling speculation about potential announcements.

Investors are particularly eager for clarity on the timeline for the affordable EV and the robotaxi rollout, both of which are seen as critical to Tesla’s growth strategy. The anticipated update is expected to address these concerns and outline the company’s plans moving forward.

In the first quarter, Tesla’s vehicle deliveries dropped by 13%, marking its weakest performance since early 2022. This decline is attributed to increased competition from Chinese EV makers and backlash over CEO Elon Musk’s political affiliations. The company’s brand has suffered, with protests and vandalism reported in key markets like China and California.

Tesla’s stock has also taken a hit, falling nearly 50% from its December highs. Analysts estimate that the company’s automotive gross margin has declined to 11.8%, down from 13.6% in the previous quarter. There is concern that continued prioritization of sales volume over profitability could further erode margins.

The company has shifted its strategy for a low-cost model, opting to produce cheaper variants using existing platforms instead of developing a brand-new model. However, production of a more affordable Model Y has been delayed by several months. This approach may impact profit margins and raises questions about the competitiveness of Tesla’s offerings.

Tesla’s plans for a driverless ride-hailing service in Texas and California are also facing hurdles. While the company has promised a rollout in 2025, regulatory approvals are still pending, and there are significant safety and litigation risks associated with deploying unproven autonomous technology on public roads.

Looking ahead, analysts expect a second consecutive annual decline in Tesla’s deliveries in 2025. The company is employing incentives like free charging and Full Self-Driving features to boost sales, but these measures may not be sufficient to counteract the downward trend.

Despite these challenges, Tesla’s revenue is expected to remain flat at approximately $21.35 billion, supported by gains in regulatory credits and growth in its energy storage business. However, the company’s overall financial health remains a concern for investors.

Tesla has also faced issues with its Cybertruck, recalling all units delivered since late 2023. In response, the company introduced a lower-priced $70,000 version and has been discounting unsold inventory. These actions indicate ongoing challenges in the electric pickup truck segment.

Trade tensions between the U.S. and China have further complicated Tesla’s operations. The company has paused imports of China-sourced components due to increased U.S. tariffs and has suspended new Model S and X orders in China following retaliatory tariffs. These developments add uncertainty to Tesla’s supply chain and market access.

As Tesla prepares to provide its quarterly update, investors are keenly awaiting details on the company’s strategies to address these multifaceted challenges and to regain momentum in the competitive EV market.

(Adapted from NDTV.com)