Tesla shares fell sharply at the opening bell Thursday after the company felt the sting of numerous price cuts it made across its model line up this year in hopes of energizing sales.
Tesla is shaving thousands of dollars of the price of its cars as American consumers pull back spending on big ticket items, anxious over elevated inflation and a pair of U.S. banks collapsed during Tesla's first quarter.
Tesla's ales did climb during the quarter, but the amount of money generated per sale fell on price cuts and first-quarter profit slumped 24%, the company said late Wednesday.
On Thursday, shares of Tesla Inc. fell 8%.
TDCowen analyst Jeffrey Osborne said he’s “concerned” about Tesla’s strategy of selling as many vehicles as possible at lower profit margins and counting on revenue generated later from “Full Self-Driving” technology. Osborne remains skeptical about when that technology will be available.
“We continue to question whether FSD will ever work on a camera-only based system” with older hardware, Osborne wrote.
Tesla made $2.51 billion from January through March, down from $3.32 billion a year ago. Revenue rose 24% to $23.33 billion, but the company’s operating profit margin fell.
CEO Elon Musk hinted that price cuts may not be over. He told analysts that Tesla evaluates them daily and wants to keep producing the maximum number of vehicles possible.
“Orders are in excess of production,” he said when asked what happened to orders since recent price cuts were announced.
Early in the quarter Tesla reduced U.S. prices on many of its models, then did it a second time early in March. The company slashed U.S. prices two more times in April, including overnight Wednesday, in an effort to boost sales. It trimmed prices in Europe as well.
The company produced nearly 18,000 more vehicles than it sold during the quarter, indicating softening demand.
Tesla’s first-quarter operating margin fell from 19.2% in the first quarter of last year to 11.4% this quarter.
Musk said Tesla wants to sell more vehicles at lower prices so it later can take in revenue from software, service and its $15,000 “Full Self-Driving” system that will turn cars into robotaxis and increase their value.
Despite the name, the cars cannot drive themselves, and Tesla warns drivers that they have to be ready to intervene at all times.
In 2019, Musk promised a fleet of autonomous robotaxis by 2020, and he said early last year that the cars would be autonomous in 2022. Since 2021, Tesla has been using owners to beta test “Full Self-Driving” on public roads.
But Tesla’s partially automated driving systems are coming under increasing scrutiny from U.S. safety regulators. The National Highway Traffic Safety Administration has sent investigative teams to more than 30 crashes since 2016 in which Teslas suspected of operating on Autopilot or “Full Self-Driving” have struck pedestrians, motorcyclists, semi trailers and parked emergency vehicles. At least 14 people were killed in the crashes.
In addition, NHTSA in February pressured Tesla into recalling nearly 363,000 vehicles with “Full Self-Driving” software because the system can break traffic laws. The agency said in documents that the system can make unsafe actions such as traveling straight through an intersection from a turn-only lane or going through a yellow traffic light without proper caution. The problems were to be fixed with an online software update.
The Justice Department also has asked Tesla for documents about “Full Self-Driving” and Autopilot.
A rare magnum of Dom Pérignon Vintage 1961 champagne that was specially produced for the 1981 wedding of Prince Charles and Lady Diana has failed to sell during an auction. Danish auction house Bruun Rasmussen handled the bidding Thursday. The auction's house website lists the bottle as not sold. It was expected to fetch up to around $93,000. It is one of 12 bottles made to celebrate the royal wedding. Little was revealed about the seller. The auction house says the bids did not receive the desired minimum price.
The New York Times and President Donald Trump are fighting again. The news outlet said Wednesday it won't be deterred by Trump's “false and inflammatory language” from writing about the 79-year-old president's health. The Times has done a handful of stories on that topic recently, including an opinion column that said Trump is “starting to give President Joe Biden vibes.” In a Truth Social post, Trump said it might be treasonous for outlets like the Times to do “FAKE” reports about his health and "we should do something about it.” The Republican president already has a pending lawsuit against the newspaper for its past reports on his finances.
OpenAI has appointed Slack CEO Denise Dresser as its first chief of revenue. Dresser will oversee global revenue strategy and help businesses integrate AI into daily operations. OpenAI CEO Sam Altman recently emphasized improving ChatGPT, which now has over 800 million weekly users. Despite its success, OpenAI faces competition from companies like Google and concerns about profitability. The company earns money from premium ChatGPT subscriptions but hasn't ventured into advertising. Altman had recently announced delays in developing new products like AI agents and a personal assistant.
President Donald Trump says he will allow Nvidia to sell its H200 computer chip used in the development of artificial intelligence to “approved customers” in China. Trump said Monday on his social media site that he had informed China’s leader Xi Jinping and “President Xi responded positively!” There had been concerns about allowing advanced computer chips into China as it could help them to compete against the U.S. in building out AI capabilities. But there has also been a desire to develop the AI ecosystem with American companies such as chipmaker Nvidia.
U.S. sports betting is booming as NFL and college football fuel massive activity. BetMGM CEO Adam Greenblatt breaks down trends, growth, and what’s next.
President Donald Trump says a deal struck by Netflix last week to buy Warner Bros. Discovery “could be a problem” because of the size of the combined market share. The Republican president says he will be involved in the decision about whether federal regulators should approve the deal. Trump commented Sunday when he was asked about the deal as he walked the red carpet at the Kennedy Center Honors. The $72 billion deal would bring together two of the biggest players in television and film and potentially reshape the entertainment industry.
Disney's changes to a program for disabled visitors are facing challenges in federal court and through a shareholder proposal. The Disability Access Service program, which allows disabled visitors to skip long lines, was overhauled last year. Disney now mostly limits the program to those with developmental disabilities like autism who have difficulty waiting in lines. The changes have sparked criticism from some disability advocates. A shareholder proposal submitted by disability advocates calls for an independent review of Disney's disability policies. Disney plans to block this proposal, claiming it's misleading. It's the latest struggle by Disney to accommodate disabled visitors while stopping past abuses by some theme park guests.
