Things have perhaps never looked weirder or more fraught at Tesla. And that’s saying a lot, given that even on a good day Elon Musk’s company is probably the world’s most chaotic major carmaker.

After a quarter defined by deep layoffs, plummeting vehicle sales and speculation about a major strategic shift to autonomous vehicles, Tesla investors, analysts and EV fans at large have one big question they hope Musk will address during this evening's earnings call: “What the heck is going on?”

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What's Going On At Tesla?

In recent months, Tesla has grappled with slumping vehicle sales, a plummeting stock price, deep job cuts and high-profile executive exits. Plus, it's reportedly shifting focus away from a cheaper vehicle and towards an autonomous taxi. 

Tesla’s CEO is a loose cannon, so there’s no guarantee he’ll provide the kind of reassurance that a more conventional chief executive would in the same situation. But given the amount of uncertainty that’s swirled about Tesla as of late, we know that Musk and other executives are feeling the heat to provide some clarity.  

Elon Musk at Tesla's Shareholders Meeting at Texas Gigafactory

"We've been through a lot of white-knuckle moments from Musk and Tesla. This is up there," Wedbush Securities analyst Dan Ives told CNBC recently

A wide variety of crap has hit the Tesla fan in recent months, casting doubt about both the automaker’s present and future. That cloud of uncertainty has hammered Tesla’s stock, sending it down over 43% year-to-date and making Tesla the second-worst performer in the S&P 500 in 2024.

Sure, Tesla has had make-or-break moments in the past. The "Production Hell" ramp-up of the Model 3 and the factory that made it around 2018 was a particular nadir for the company. But that moment created a clear path to the future, resulting in a more affordable, mass-market EV that remains extremely popular even today. Right now, however, the path is even less clear—as is the product or service that will supposedly get Tesla to the next phase of its existence.

A quick rundown of what’s gone down should help set the stage for why today’s earnings call is so critical. 

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The Robotaxi Thing

Earlier this month, Reuters reported that Tesla had scrapped its longstanding plan to build a cheaper electric car. Instead, the report said, Tesla will shift focus to an autonomous taxi built on the same underlying platform. Since then, reporting from Bloomberg and Electrek has found that the cheaper car may have been shelved rather than canceled outright.

Regardless, without a mass-market car coming soon, it’s unclear what will drive Tesla’s growth in the near term. Its current lineup is getting stale. The polarizing Cybertruck pickup that launched last year is an expensive, niche vehicle—and one that is pricier and with less range than initially expected. Furthermore, it's been marked with high-profile quality problems, and already one major recall due to a stuck accelerator pedal

The robotaxi business, meanwhile, is difficult, expensive and full of regulatory hurdles.

Tesla Model 2, the render of

For years, Musk has promised that fully autonomous Teslas are right around the corner to no avail. Now he appears to be betting the farm on that extremely challenging technology rather than investing in Tesla’s bread and butter: selling electric cars. 

Deutsche Bank analysts recently cut its price target for Tesla, citing "the risk of no new vehicle in Tesla's lineup for the foreseeable future" and "considerable execution risk to the development of Robotaxi technology."

Apart from a couple of cryptic tweets from Musk, there’s been no official line from Tesla about the plan going forward. In the aftermath of Reuters’ report, Musk said the outlet was “lying” but also set an August reveal date for the robotaxi and said Tesla was “going balls to the wall” on autonomy. 

In other words, Musk seems to be betting the farm on some kind of autonomous taxi technology. But how that will even work, who the cars will be sold to and how it's meant to be a business model for Tesla are all complete unknowns. 

An Aging Lineup And Layoffs

Tesla EVs at V4 Supercharging station. From left: Model 3, Model S, Cybertruck, Model X and Model Y

The apparent lack of a robust product pipeline comes off as especially dire given Tesla’s lackluster sales as of late. In the first quarter of 2024, Tesla’s global car deliveries dropped by 20% from the previous quarter. They also slid year-over-year for the first time since 2020. The EV market as a whole is experiencing a slowdown in growth, and Tesla in particular seems to be suffering from a dip in demand. The company has dropped the prices of its cars to juice consumer appetite, but that also deals a blow to profit margins. 

In April, Musk announced Tesla would lay off at least 10% of its global staff. At the same time, it saw some high-profile exits. Drew Baglino, an 18-year Tesla veteran who led its engineering efforts, resigned. The same goes for Rohan Patel, Tesla’s former VP of policy and business development. In a subsequent regulatory filing, Tesla said the job cuts were part of a “company-wide restructuring.” It’ll be on Musk to explain what that means and convey a sense of stability. 

Down, But Not Out?

Tesla FSD Beta demonstration

In other news, Tesla has been aggressively pushing Full Self-Driving (FSD), its poorly named driver-assistance feature, in an apparent attempt to boost revenues amid the slump in sales. Unlike more conventional advanced cruise control features, which work on the highway, FSD aims to pilot a car through any environment, no matter how complex. But drivers need to pay attention, and FSD is prone to misbehaving. Tesla recently slashed FSD's price and gave every Tesla owner a 30-day trial. We expect some questions on that strategy as well. 

As always, there are some enthusiastic Tesla fans and shareholders who have full faith in Musk and don’t see much wrong with what’s going on.

To be fair, Tesla is still in a decent spot in the grand scheme of things. Even after losing nearly half of its market capitalization this year, the EV maker is still worth nearly 10 times what General Motors is worth. Even during a dismal first quarter of sales, Tesla was still responsible for just over half of all U.S. EV sales, according to Cox Automotive. 

Still, Musk and his team have some explaining to do. But there’s no guarantee that they'll play ball. Remember how he told advertisers leaving X (formerly Twitter) to “Go fuck yourself?” We're prepared for that possibility too.

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