As the debate rages over whether Tesla should be valued as a car maker or a software company, CEO Elon Musk made his opinion clear.
“If you evaluate Tesla as just a car company, that’s basically just the wrong framework,” Musk said during Tesla’s first-quarter earnings call on Tuesday.
Musk’s comments came at a critical moment for Tesla. Ahead of its earnings release, Tesla faced increasing pressure from investors over its future. Investors were particularly worried that Tesla might abandon plans for a new, cheaper car altogether, as Musk has repeatedly stated his intention to shift much of Tesla’s resources into robot taxis and self-driving car technology. Investors balk at the idea that an automaker with declining sales would delay the release of its new model and instead develop technology that doesn’t yet exist.
Instead, Tesla split the difference. The company has pushed back the production schedule of its new models from late 2025 to early 2025, with the possibility of them even hitting the market by the end of this year, Musk said. At the same time, it clarifies that the company’s investment thesis should focus exclusively on its technology efforts.
“If someone doesn’t believe Tesla will solve autonomy, they shouldn’t be an investor in the company,” Musk said.
When asked whether the company could develop self-driving cars without him, Musk expressed confidence that the work was nearing completion. “Even if I get abducted by aliens tomorrow, Tesla will solve autonomy, maybe slower, but at least for vehicles,” he said.
A bad quarter for Tesla
However, the down-the-middle strategy Tesla chose belied the earnings call, which was particularly risky given the company’s poor performance. Investors and analysts were already prepared to expect Tesla to have a historically bad quarter – and that was the case.
Earlier this month, Tesla released figures that showed vehicle deliveries fell 8.5% in the first quarter, the first year-over-year decline in four years. As the earnings reports showed, these poor numbers impacted the rest of Tesla’s business. First-quarter revenue fell 9%, the largest decline since 2012, to a total of $21 billion, according to an earnings release. Total vehicle sales fell 13% compared to the previous year. Net income didn’t fare much better, falling 55% as the company posted revenue of $1.1 billion in the quarter.
Perhaps the only bright spot for investors was Tesla announcing it would speed up production of its upcoming cars. Investors were eagerly awaiting further news from Tesla leadership about when new models would come to market after the company reportedly phased them out entirely in favor of its robotaxi efforts. The new model, rumored to be an affordable car for under $30,000, is still a work in progress.
When an analyst pressed for details about the lower-cost Tesla during the call, Musk declined to elaborate. “We said everything we wanted on that front,” he replied.
However, the lack of details was enough for Wall Street. Tesla shares rose more than 13% in after-hours trading on Tuesday evening and continued to rise.
Tesla “solves autonomy” for self-driving cars
In addition to the new car models, Musk also gave information about the self-driving technology that Tesla is developing. In describing the project, Musk painted the picture of flipping a switch to turn millions of Teslas around the world into self-driving cars.
“Tesla is actually almost entirely about solving autonomy and being able to activate that autonomy for a massive fleet,” Musk said. “It could be the biggest asset increase in history if that happens, if you can drive unattended and fully self-driving.”
Tesla currently does not have a fully self-driving car. The latest autonomous vehicle software called “Full Self-Driving” still requires human supervision. To stimulate demand, Tesla cut prices for the additional software from $12,000 a year to $8,000 earlier this week.
On the call, Tesla executives tried to reassure investors that the bad quarter was just a lull until the company could perfect its self-driving technology. Musk reiterated that it is “currently between two major waves of growth.” The first wave referred to the initial adoption of electric vehicles that Tesla initiated when the company managed to sell its cars to people other than environmentally conscious consumers. According to Tesla, the second wave will come once self-driving cars become the norm and dominate the market.
For this reason, Tesla expects a difficult rest of the year and mediocre sales growth. “In 2024, our vehicle volume growth rate could be significantly lower than the growth rate achieved in 2023 as our teams work to introduce the next generation of vehicles and other products,” Tesla wrote in a shareholder presentation. In the call, Musk said he expected sales in 2024 to be higher than last year.
According to a post by Musk on .
This story was originally published on Fortune.com