Why is Elon Musk getting a little nervous? Here’s the reason

Synopsis

Tesla’s Q2 report is out and the company’s revenue growth has not been satisfactory. There are other challenges too. Elon Musk who is the CEO of the company faced tough questions when he addressed analysts on the company’s performance.

AgenciesElon Musk getting a little nervous.

Elon Musk is worried and it has nothing to do with the US Presidential Election. His company Tesla’s Q2 report is out and he had a tough time fielding questions from financial analysts and reporters. The company’s revenue growth, growth in share prices and revenue margins have all fallen on a year-on-year basis.

The Tesla CEO sounded defensive when he was questioned on the company’s performance and the alleged diversion of resources to another company owned by Musk. The electric vehicle manufacturer is facing challenges due to various regulatory requirements, global trade disruptions, changing consumer preferences, competition and also some legal requirements mandated by emerging economies such as India.

Q2 report:

A casual glance at the report revealed that though the company earned higher revenue than what was expected, the adjusted earnings margin dropped from 18.7% to 14.4% year over year.

The free cash flow was also less that what the analysts had expected by half a billion dollars. The company’s earnings per share also fell from $0.91 to $0.52.

Nervous Elon Musk:

On Tuesday, the CEO fielded questions from financial analysts and reporters who grilled him on the company’s falling revenue, falling demand for automobile products offered by the company, continuing delays in the company’s Robo Taxi project and on the company’s business strategy.

The company has been releasing a limited number of automobile models rather than investing in the production of large scale lower-cost models.

Musk response was brief that the company will continue making great products.

Is Musk diverting Tesla’s resources?

One of the analysts specifically asked Musk if Tesla’s engineers and graphic processing units were being diverted to xAI which is another company owned by Musk. He was particularly questioned about the resource allocation. The CEO responded that nothing contrary to Tesla’s interests would be carried out.

His responses did little to assure the share-holders who watched the proceedings.

Challenges for Tesla:

Across the world, consumers are moving away from e-vehicles in favor of hybrid vehicles and other diesel vehicles. This may be one of the reasons why Tesla may have had reduced revenue margins.
The disruptions to global trade still continue to exist. Further, United Nations Trade and Development (UNCTAD) has estimated that global trade in goods has fallen by 3% in 2023.

There is also increased regulatory filings and compliances which have been mandated by different countries for the e-vehicle industry. Countries such as India have also mandated ‘domestic sourcing’ clause in its national law which has prevented the growth and entry of many international e-vehicle companies into the country.

FAQs:

Is the US Government supporting Elon Musk?
The entrepreneur has lashed out at the Biden administration. The government has also unsuccessfully sued Musk’s Space X for discouraging the hiring of immigrants and refugees.

Which metal is used in the manufacture of e-vehicles?
Lithium-ion batteries are used in the manufacture of e-vehicles. Its storage and disposal has raised questions related to the pollution aspect.

Disclaimer Statement: This content is authored by a 3rd party. The views expressed here are that of the respective authors/ entities and do not represent the views of Economic Times (ET). ET does not guarantee, vouch for or endorse any of its contents nor is responsible for them in any manner whatsoever. Please take all steps necessary to ascertain that any information and content provided is correct, updated, and verified. ET hereby disclaims any and all warranties, express or implied, relating to the report and any content therein.

(Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.)

Download The Economic Times News App to get Daily International News Updates.

…moreless

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : IndiaTimes – https://economictimes.indiatimes.com/news/international/us/why-is-elon-musk-getting-a-little-nervous-heres-the-reason/articleshow/112024611.cms