Tesla Expected to Announce its Worst Results in Seven Years

Investors in Tesla are preparing themselves for what could be the worst quarterly results in seven years as the company experiences slowing sales and increasing competition – especially on prices.

There are also rumors doing the rounds about Tesla shifting its strategy away from launching a cheaper $25,000 EV, unofficially called the Model 2, to focusing on self-driving "robotaxis."

Elon Musk has disputed the rumors of changing his plans for the Model 2, adding that the development of autonomous self-driving functions is an 'obvious' step for the company to take. He also confirmed the launch date for the new robotaxi as August 8 this year.

Shareholders who are already struggling with declining stock prices, falling sales numbers, and controversial plans to move the company HQ to Austin, Texas, from its present location in Delaware, now are trying to figure out whether Tesla plans to be a large-scale manufacturer or a more niche provider of self-driving technology. Investors are bracing themselves for what could be Tesla's lowest gross margin since early 2017, around the time it began producing the Model 3, its first mass-market vehicle.

Cash flow is also expected to dip into the red for the first time since early 2020, adding to the challenges Tesla faces. Many shareholders are eager to learn what the real plans are for the new $25,000 Model 2 as production is penciled in for 2026.

There is still optimism surrounding Tesla's progress in bringing truly autonomous driving to the market, with current vehicles having the option for owners to pay $99 monthly for the car to steer, brake, and accelerate without human intervention, but it is not currently fully autonomous as it still needs a driver to pay attention and be prepared to take control if necessary. The latest version of Tesla's truly self-driving software is a massive step forward.

Analysts have mixed opinions about the direction that Tesla is taking, with some predicting a loss of market share, even though production and deliveries are expected to ramp up and the company increasing its lead in the field of autonomous driving.

However, other analysts believe shareholders looking for clear plans about where Tesla is really focusing are likely to be disappointed and expect plans for the release of the Model 2 to more than likely take precedence.

The potential shift in focus could also lead to changes in Tesla's investor base, with those who were historically attracted by Tesla's edge in EV production and cost advantage being potentially replaced by more tech-focused investors that hold a longer investment horizon.

Either way, quarterly results are expected to be underwhelming.