Tesla (NASDAQ: TSLA) needed what Elon Musk delivered during the company’s Q1 Earnings Call last night: an adult in the room.
“The focus for us and investors was around the blueprint and roadmap for growth as Musk and Tesla are facing a Category 5 storm after a Cinderella ride the last few years,” Dan Ives, analyst at Wedbush, wrote in a note.
“Last night in a much-needed conference call, Elon Musk finally stepped up as the adult in the room and laid the foundation for Tesla’s growth strategy with, most importantly, a lower cost vehicle now slated for 2025 production and delivery.”
Tesla investors were left dumbfounded after its Q4 2023 Earnings Call in January, as the automaker outlined a “notably lower “growth rate as it found itself between two growth periods.
Tesla Q1 2024 earnings results: Total revenues of $21.3 billion and $0.45 EPS
Additionally, the company and its executives did not give an outlook or guidance for production or deliveries for the year, and the only bullish detail of the call is that its next-gen platform was set to launch sometime in the latter half of 2025.
However, the Q1 call gave everyone something to look forward to. Not only did Tesla outline its plans to launch the next-generation platform and an updated lineup of vehicles earlier than originally outlined, but Musk also detailed that the vehicles would be launched in late 2024 at the earliest.
The main concern from Ives and Wedbush was that Tesla would ditch its affordable models altogether and dive straight into Robotaxi, but their worries were eliminated, as the note states:
“Instead, it appears a “Model 2.5” will be the answer with a lower-cost EV vehicle that we believe will be in the $25k-$30k range that uses “aspects of the next-gen platform” as well as the current platform and will be produced on the current factory lines. This will be accelerated ahead of 2H25 and will be key to the Tesla volume turnaround in 2025. While it’s not a next-generation Model 2 platform, we believe this is the right strategy and move at the right time.”
Nevertheless, patience will be a virtue for those investors who decide to hang on and wait. Delivery growth is still a challenge. Tesla outlined in its Shareholder Deck that other automakers are now focusing on hybrids instead of pure EVs, which goes against the company’s mission.
Demand for EVs is slowly moving in the wrong direction due to the emphasis on hybrid electric vehicles, but Tesla is going to need its next-generation lineup to come through with execution. “Otherwise, this could derail the bull thesis in the next 6 to 12 months as the pressure builds on Musk to navigate Tesla through this dark demand storm,” Ives concludes.
Disclosure: Joey Klender owns TSLA stock.
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