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Tesla investors have much to mull as the automaker prepares to reveal earnings

A MARTÍNEZ, HOST:

The world's most valuable carmaker, Tesla, releases its latest earnings report today. And it comes at a turbulent time for the company and its CEO, Elon Musk.

LEILA FADEL, HOST:

Tesla is likely to show a profit. But that may not be enough to win over disappointed investors. Its stock recently crashed. And Musk is on trial for securities fraud.

MARTÍNEZ: NPR's Camila Domonoske is here to talk about this. So why might this particular update on profits be a big deal, even to people, maybe, that don't own Tesla stock?

CAMILA DOMONOSKE, BYLINE: Well, I mean, this is Tesla that we're talking about. It's an incredibly influential company. It reshaped the auto industry in its own image, in many ways. So its relationship with investors has big implications for the fight against climate change, for the vehicles that are available for shoppers in the future. Analyst Dan Ives is calling this one of the most important earnings calls in Tesla history. And that's because it's coming at this really pivotal moment, with the stock price way down and competition way up.

MARTÍNEZ: Yeah. So how are investors feeling, then, right now?

DOMONOSKE: Yeah, not great. Tesla was a star on Wall Street. The stock seemed almost unreal. I mean, it was like magic how high it was. And, yeah, that's not the case anymore. The question now is, can the company win these investors back over? Tesla did have record sales last year. But those sales were also, actually, a disappointment because they didn't hit targets. So coming into this call, pretty good profits and revenues definitely aren't going to do the trick. Investors have gotten used to seeing super rapid growth from Tesla. And the question now is if the company can keep that up or if it's going to slow down.

MARTÍNEZ: Yeah. So is that why Tesla's stock has lost value?

DOMONOSKE: You know, it's part of it. But the stock went down 70% last year, even though the company grew, right? The losses were ridiculous. You can argue that's because the price was ridiculously high to start with. But obviously, this is about more than just sales coming in a little under expectations. It also wasn't just the broader stock market decline. Factors included Elon Musk himself, his purchase of Twitter, investors worrying that he was distracted. And a big component was growing competition in the electric vehicle space. The entire industry is embracing battery-powered vehicles. You've got things like the Ford Mach-E, the Volkswagen ID.4, Kias, Hyundais, new models from Chevy. Tesla still dominates the space. But there are a lot more options out there now.

MARTÍNEZ: So how is Tesla responding to this crowded e-room?

DOMONOSKE: Yeah. Well, they're trying to make a lot of vehicles and sell them for less money, basically. Tesla just announced an expansion of its campus in Nevada, including a new truck plant and more battery production. And they've cut prices up to 20% for some models, which is dramatic. That was frustrating for some people who own Teslas already. But for people who are shopping for cars - Jessica Caldwell is with Edmunds. And she says it caught everyone's attention.

JESSICA CALDWELL: Someone may not want a Tesla product. But all of a sudden, you drop the price on something, people start to forget about all the other things that are going on and just focus on what that price is.

DOMONOSKE: Tesla's popular Model Y SUV is now cheaper than the average new vehicle, at least for buyers who qualify for federal tax credits. Whether Tesla can make money on these prices is going to be a big topic later today.

MARTÍNEZ: And on top of all this, Musk is being sued. And he's been testifying in court this week. What's the latest there?

DOMONOSKE: Yeah. So we listened to him earlier this week. He tweeted about funding secured to take Tesla private, which was not true, it turned out. He says he didn't intend to deceive anyone and that you can't prove it affected Tesla's stock price.

MARTÍNEZ: That's NPR's Camila Domonoske. Thanks a lot.

DOMONOSKE: Thank you. Transcript provided by NPR, Copyright NPR.

A Martínez
A Martínez is one of the hosts of Morning Edition and Up First. He came to NPR in 2021 and is based out of NPR West.
Camila Flamiano Domonoske covers cars, energy and the future of mobility for NPR's Business Desk.