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Elon Musk holds quarterly investor day calls to talk about the future of Tesla. A call earlier this year backfired when his investors demanded to know if the backlash against his actions, such as buying Twitter and attempting political influencing using the platform, has hurt vehicle sales.

At the end of October 2022, Elon Musk bought Twitter for $44 billion. He immediately fired many employees and restructured the company.

He reinstated accounts for some canceled celebrities and thousands of users suspended for racism, harassment, and misinformation. At the same time, he removed the New York Times verification, calling its feed diarrhea. He made other companies and celebrities pay a $1,000/month fee to keep their blue checkmark.

But Elon Musk did not stop at restructuring Twitter. He used his personal account to suggest Ukraine cede control of Crimea to Russia. He also Tweeted that his factory workers would give up stock options if they voted to unionize before a judge ordered him to take down the illegal, intimidating messageaccording to Teslarati.

According to Vanity Fair, Elon Musks actions could be responsible for Teslas 70% stock value nosedive. The publication cited one famous media personality who owns a Tesla, saying that after the CEOs latest actions, I found myself not wanting to be associated with anything related to Musk.

Tesla has 27% of its dealership in the historically liberal state of California. So Vanity Fairs assertion that Musks antics on Twitter seemed to quickly sour Democrats feelings about Tesla, was understandably concerning for businesspeople invested in the automakers success.

According to the BBC, one investor put the question directly to Elon Musk. During January 2023s quarterly investor call, the CEO was asked if his political influencing on Twitter was damaging the Tesla brand.

Musk quickly told his investors, I think Twitter is actually an incredibly powerful tool for driving demand for Tesla. The CEO feels other companies should be following his lead:

I would really encourage companies out there of all kinds, automotive or otherwise, to make more use of Twitter and to use their Twitter accounts in ways that are interesting and informative, entertaining, and it will help them drive sales just as it has with Tesla.

Musk added that his 127 million follower count on Twitter suggests that Im reasonably popular.

In the past, Musk has told Teslas investors that his only mission is to increase production because the demand for his vehicles is nearly infinite. This could be why he doesnt bother with traditional advertising or even having a media relations team. But in Januarys investor call, Elon Musk also announced that he would be slashing the MSRP of several Tesla models. When asked about why he said, Price really matters.

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Tesla Investors Want To Know if Elon Musk is Hurting Sales - MotorBiscuit

This commentary originally appeared in Fortune.

Do you try to do too much and get intoxicated with your past success? You might be a stupid genius like Elon Muska person who is brilliant in certain limited domains and inept or even emotionally immature in others. If so, prepare for bad daysor consider how to put the brakes on your imagination and ambition, just a touch.

We all have bad days. On April 20, Elon Musks much-touted $3 billion new SpaceX rocket became a fireball over the Gulf of Mexico three minutes into its first flight. Musks company labeled the explosion a rapid unscheduled disassembly. Sure, as Musk, Space X, and NASA insist, something was learned about the failures of the stages to separate and the engines to function, as we can learn from most setbacks. But whatever you label it, it was a costly failure theyd have preferred avoiding.

Tragically, the very same day Musks automotive juggernaut Tesla nosedived after reporting disappointing first-quarter results. That translated to a $13 billion loss for Musk on top of the $3 billion that had flamed out on the space launch. For most people, $16 billion in losses would be devastating, but Musk is still the worlds second-wealthiest person with a total net worth of $164 billion, according to the Bloomberg Billionaire Index.

Additionally, Musk backtracked a second time on his user-hostile verification policies. And lets not forget he also abandoned his decision to pull out of buying Twitter for an overpriced $44 billion after costly distracting litigation and public taunts at Twitters former leaders. His ad hominem insults against regulators and a heroic British Navy diver, as well as his interactions with flamboyant race-baiting figures and other diversions, seem less than smart.

Meanwhile, the list of missed promises grows longer, including: a fleet of 1 million autonomous taxis he promised by 2020, fully autonomous cars promised by 2017, the Tesla Semi truck by 2018, vehicles that fly and float, Neuralink brain implants by 2020, a Space X mission to Mars, open-source Twitter algorithms last fall, Boring Company tunnels connecting major cities such as Las Vegas and Los Angeles by last year, and a 10-kilometer hyperloop tunnel by 2020.

In March 2023, research revealed that Solar City, the inside enterprise forced upon Tesla shareholders in 2016, has sold only 3,000 solar roof systems, instead of the companys promised 1,000 per monthor about a 99% failure to achieve the target. Given all this volatility, Tesla board members cannot get liability insurance and must be insured by Musk personally!

And lets not even address his volatile family and romantic life, which makes Mozart, Einstein, and Jobs look almost conventional. Alas, Mozart, Einstein, and Job were erratic geniuses as well.

Musical genius Wolfgang Amadeus Mozart composed more than 800 major works, mastering every musical genre of his era, earning him the distinction of being one of the worlds greatest composers in his short 35 years. However, his eccentricitiesfrom his scatological humor and bawdiness in his writing to frenzied sudden impulsive acts such as leaping around the room in public like a catled some to believe that he suffered from some mental pathology. Endocrinologist Benjamin Simkin mapped the paradox of Mozarts majestic music and erratic personality in his book, Medical and Musical Byways of Mozartiana, coming to the diagnosis that Mozart probably suffered from Tourettes Syndrome.

The name Einstein is often used as shorthand for genius. Theoretical physicist Albert Einstein is widely regarded as one of the most influential scientists and thinkers of all time. He is credited for developing two of the most foundational pillars of modern physics: relativity and quantum mechanics. However, his misogynistic manifestos with servile rules for his partners in early marriages and a volatile personal life led biographer Walter Isaacson to conclude that his conquest of general relativity proved easier than finding the forces for the formulas swirling within his family.

Isaacson, who is also the brilliant biographer of Apple founder Steve Jobs, described the array of eccentricities of this other genius. He revealed the array of situations where Jobs was spiteful, rigid, and arrogant: career-long feuds against Google and Adobe, insisting that he would not meet with President Obama until personally invited, odd binge diets, winning highly extended staring contests, and a disdain for bathing. In his first run as CEO, Jobs sparked ferocious internal warfare between divisions, and took sides in the feud between the Lisa and Mac teams. In light of his own volatile home life, he confessed to Isaacson that he wanted the book to be a guide to absent fathers.

Are these personality quirks the essence of their brilliance or pathological eccentricities which sabotage greatness and should not be excused? Sometimes, its a conduct that is actively chosen by mid-career revolutionaries. In 1958, psychologist Edwin Hollander coined the term idiosyncrasy credits to explain how leaders emerge by rising up to group norms and earn the right to be quite non-conforming. The leaders unconventional actions become a device to trigger more innovative behavior later in their career.

Finding your own balance on the spectrum of appropriate conduct as a creative force means considering a few factors: Is your conduct necessary or just based on affect? Is the erratic behavior deceitful to colleagues, shareholders, or others? Does it free your schedule from drowning in needless admin, schedules, and routines? Or is your unusual behavior actually a form of insidious conformity in an environment that rewards it, such as a university, an ad agency, a software firm, or a fashion house? Is your flamboyance hurting others and eroding trust? Is it leading to legal and cultural backlashes that divert your time and impact? Do you have the wrong role models in mind?

I could list hundreds of the greatest Nobel Prize winners and path-breaking entrepreneurs who were not stupid geniuses. As philosopher Arthur Schopenhauer wrote in 1818, It has often been remarked that there is a side at which genius and madness touch, and even pass over into each other. Yet, we must keep in mind that insanity does not guarantee brilliance, cruelty does not produce creativity, and arrogance is not a recipe for impact.

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Is It Smart to Be a Stupid Genius Like Elon Musk? - Yale Insights

Elon Musks risky strategy of piling on one margin-eroding price cut after the other is already paying dividendsby ramping up the pain for Teslas competitors.

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Ford announced on Tuesday sweeping price cuts for its Mustang Mach-E in the U.S. market, where the crossover was the bestselling EV last year not built by Musk.

This makes it thesecond timeit has followed Teslas lead since the start of the year.

The Detroit incumbent knocked off $3,000 from the base version, a cut of 6.5%, reducing its list price to $42,995.

It went even further with the top-of-the-line GT Extended Range nameplate, slashing that by $4,000 to $59,995; at the start of the year, this car still cost nearly $10,000 more.

Unfortunately for Ford CEO Jim Farley, his business cannot exactly afford it.

First-quarter results published after the closing bell revealed ballooning losses at its EV division, dubbed Model e, on the back of spiraling costs.

The $700 million deficit was so deep red the business actually managed to breach the ignominious mark of a negative 100% margin.

That means that for each dollar in revenue Model e generated during the quarter through the sale of an EV, its operating loss went up by an equivalent amount.

It was always expected that traditional car companies, lagging far behind Tesla, would not be profitable in the EV space anytime soon.

But Ford's Model e quarterly financials were truly dire. By comparison, Tesla's operating profits weighed in at an extremely robust 11.4% return for the period despite heavily discounting its models this year.

This allows Musk to further dial up the pain without swinging to a loss.

Late last month Tesla said it viewed this year as a unique opportunity to prey on incumbents like Ford through what now has becomefive straight price cutssince January.

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As many carmakers are working through challenges with the unit economics of their EV programs, we aim to leverage our position as a cost leader, it said.

A race to the bottom where Tesla would be the last man standing, in other words.

Musk has come under fire from investors for warning on the April 19 earnings call he might even be prepared to accept zero profit per vehicle sold. That is because he believes Tesla can recoup the lost earnings and then some with the sale of software like its Full Self-Driving feature, a $15,000 optional add-on that can be downloaded from the cloudprovided of course that it one day solves autonomous driving.

Tesla has triggered a price war in EVs that will have industrywide consequences: Legacy OEMs [original equipment manufacturers] will have to follow, but with higher cost structures, UBS wrote ahead of Fords earnings on Tuesday, designating Tesla and Ford as one of its top and bottom picks in the sector, respectively.

To prepare investors for the pain yet to come, Ford has attempted to portray Model e as a kind of tech startup, tasking it, for example, with building up a suite of vehicle-embedded software services to bolster its argument.

So it came as little surprise when the carmaker revealed in March for the first time that the new division suffered a $2.1 billion loss for 2022 and forecast this would widen to $3 billion this year.

As part of a presentation on its new financial reporting structure, it pledged to turn around the business and position it to achieve an 8% operating margin starting in 2027, versus the whopping 40% negative margin Model e reported for the last one.

Typically the best way for Ford to improve its EV results in the face of headwinds such as sweeping price cuts is through higher volume.

Regardless of powertrain technology, the fixed-cost-heavy car business is all about scalethe more units of a particular model you sell, the faster profit growth should accelerate, a term generally referred to as operating leverage.

Yet Fords EV lineup currently suffers from one major problem that throws a serious monkey wrench into that equation.

Its variable costs, such as the raw materials like steel used to build a car, actually exceed the overall revenue generated with each electric vehicle it sells at present.

As a result of this negative contribution margin, its losses actually worsen the more Mustang Mach-Es and F-150 Lightnings that Ford delivers to customers.

These poor unit economics that Tesla alluded to late last month means Ford is in effect buying market share at a steep cost to its income statement.

Speaking to investors on Tuesday, Ford boss Farley held out hope this wouldnt remain the case much longer even if overall losses at Model e continue, owing to investment in the business.

Were on track this year toward a contribution margin approaching breakeven in the Model e, the CEO said.

This story was originally featured on Fortune.com

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Original post:

Elon Musks price war pays off as Ford is forced to heavily cut EV prices to compete with discounted Teslas - Yahoo Finance

Tesla's price cuts hammered its profit margins last quarter. Aly Song/Reuters

Tesladisappointed its shareholders on April 19 when it revealed how its aggressive price cuts have affected its business.

The carmaker startedslashing the price of its Model Y SUV and Model 3 sedan in January and its latest earnings report showed that profit margins have fallen dramatically over the past quarter.

In a call with investors, CEO Elon Musk hinted that he'll push ahead with the strategy in a bid to lure customers away from traditional automakers and EV rivals.

But analysts have warned that Tesla may have to sacrifice its short-term financials to boost its market share and it might be too early to say whether the price war will help or backfire.

Tesla has cut prices six times this year.

The entry-level Model 3 now costs less than $40,000, down from $62,990 at the start of the year. The Model S and Model X are also 20% cheaper than they were at the beginning of 2023, even after Tesla raised US prices Thursday.

But these cuts have eaten into Tesla's profit margins. In Wednesday's earnings report, the company disclosed that its profit had plunged 24% year-on-year to just over $2.5 billion.

Shares fell nearly 10% at Thursday's market close, wiping out $56 billion worth of valuation a figure higher than Ford's market cap.

Wall Street had anticipated that margins would fall but traders were likely surprised at just how big the drop was, according to Morningstar equity analyst Seth Goldstein.

"The extent of margin declines was below what I was expecting and what the market was expecting too," he told Insider. "That's why we saw the stock sell-off, it was a reaction to that."

In Wednesday's earnings call, Musk told investors that the company will put sales growth ahead of profit in a weak economy.

"We've taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and a higher margin," he said.

Musk's willingness to pursue a strategy that is hitting profits suggests he might be eyeing a market occupied by legacy automakers. Ford was one of the only traditional automakers to respond to Tesla's cuts in January, dropping the price of its Mustang Mach-E, but it has not made further reductions.

While price competition isn't uncommon in the auto industry, car companies might struggle to match the size of Tesla's cuts without hurting their own profit margins.

"I think legacy automakers are left scrambling right now do they cut prices, or do they sell fewer EVs at a higher price to preserve profits? They're faced with a choice between cutting prices or hurting profits even more. That makes for an interesting scenario in terms of how they respond," Goldstein said.

Tesla's margins fell last quarter because price cuts ate away at revenue, butmargins could rebound if Musk manages to cut costs.

Musk and other executives said Tesla would bring in innovative manufacturing techniques and use smaller factories in a presentation on March 1. The EV maker is also rumored to be developing a cheaper model, expected to cost around $25,000.

"They're passing these cost savings that they're making on to the consumer, whereas I think historically that would just be margin that would go into the books of the automaker," Caspar Rawles at Benchmark Mineral Intelligence, a price-reporting agency, previously told Insider.

"But Elon alluded that they have a mandate to try and maintain a low sticker price for these vehicles, which obviously has been extremely challenging over the last couple of years with all of the supply chain problems that they faced," he added.

By slashing prices and aggressively cutting costs, Tesla is choosing to suffer short-term profit pain in exchange for growing its longer-term market share but it will be a while before Musk can say whether that was the correct approach.

"Right now, it looks like the company's competitive position is being prioritized over protecting profitability," AJ Bell investment director Russ Mould said Thursday. "Only time will tell if that is the right move."

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Cheaper Teslas are hurting profits, but Musk still wants to cut prices - Business Insider

Elon Musk is years behind on his ambition to render Tesla Inc.s cars fully autonomous. Hes now saying in no uncertain terms that hes willing to bet the companys profit margins on making it happen.

Musk said on a conference call last week that Tesla has the wherewithal to sell cars at zero profit and then earn immense sums later off driverless software.

The trouble with that for investors? His predictions since at least 2019 that autonomous Teslas are just around the corner havent panned out.

Were the only ones making cars that technically we could sell for zero profit for now, and then yield actually tremendous economics in the future through autonomy, Musk said April 19. Im not sure how many of you will appreciate the profundity of what Ive just said, but it is extremely significant.

The challenge Musk has had turning driverless visions into reality isnt stopping him from going forward with markdowns that threaten to set off a price war.

The Austin, Texas-based company has lowered the cost of its top-selling Model Y 29 percent in the span of just a few months. Thats dented the companys margins and spooked investors concerned about deteriorating profits.

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Elon Musk is willing to bet Tesla's profits on a driverless dream - Automotive News