Falling prices from competing car manufacturers and rising interest rates are making business difficult for Tesla. CEO Elon Musk: “I don’t know what the hell is going on.” Justin Sullivan/Getty Images
Even Elon Musk struggled with the uncertain macroeconomic environment.
Tesla has repeatedly cut electric car prices this year to keep up with competition and rising interest rates.
Tesla reported record sales of $24.93 billion on Wednesday, beating expectations.
This is a machine translation of an article by our US colleagues at Insider. It was automatically translated and checked by a real editor. We welcome feedback at the end of the article.
To put it mildly, the past three years have been a wild ride for the economy on a rollercoaster ride, past the COVID-19 pandemic, inflation, rate hikes, recession fears and now hoping for one soft landing.
The situation is so confusing that even Elon Musk — the boss of several visionary and futuristic tech companies — seems desperate and has found just the right combination of words to express how many are feeling.
“One day the world economy seems like it’s collapsing, the next day it’s fine again. I don’t know what the heck is going on,” Musk, the CEO of automaker Tesla, said Wednesday during a conference call with analysts on second-quarter results.
“We are in what I would call turbulent times,” he added.
Musk even enlisted psychic help to underscore his point: “I don’t have a crystal ball for the global economy. I would really appreciate if I could borrow that crystal ball,” he said. Tesla’s Investor Relations department put it more succinctly, saying in their investor deckthat the challenges of these uncertain times are not yet over”.
“Buying a new car is an important decision for the vast majority of people. So when there is economic uncertainty, people tend to hold off on buying a new car, at least to see what happens,” he said.
To make matters worse, since March 2022 the US Federal Reserve has been on a cycle of rate hikes that is making it more expensive to buy anything with debt — meaning the price of any vehicle bought on credit is also rising.
That’s why Tesla lowered the prices of its electric cars, as Musk explained: “We had to do something about it.”
Depending on the macroeconomic environment, the electric vehicle maker could cut prices again to boost sales.
“I think it makes sense to sacrifice margins to produce more vehicles,” he said during the earnings call.
Tesla reported record sales of $24.93 billion on Wednesday, beating analysts’ forecast of $24.47 billion, according to data from Refinitiv. Adjusted earnings per share came in at 91 cents a share, beating the 82 cents a share expected by analysts.
The shares by Tesla were down 4.2% in after-hours trading to $279.07 a share. They closed 0.7% lower on Wednesday and are up 136% this year.
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