Tesla's Big Price Cuts Helped Sell More Cars, But Didn't Help Profits

Elon Musk’s electric-vehicle maker said Sunday that it delivered 422,875 vehicles to customers globally in the first quarter, up around 36% from the year before. The result also topped fourth-quarter deliveries by about 4% but fell short of the expectations of analysts surveyed by FactSet. They estimated the company would deliver around 432,000 vehicles in the first quarter.

Investors are poised to get a first look at how the price cuts are affecting Tesla’s balance sheet on April 19, when the company is scheduled to report first-quarter results. Wall Street expects first-quarter profit to slide to around $2.6 billion, from $3.3 billion for the first three months of 2022, despite an expected increase in sales, according to FactSet. Quarterly revenue is forecast to climb above $23 billion, from $18.8 billion a year earlier, FactSet data show.

Model 3 sedans and Model Y crossovers, Tesla’s more affordable offerings, made up around 97% of the company’s first-quarter deliveries. The remainder were Tesla’s luxury vehicles. The company didn’t disclose having sold any semitrailer trucks in the period.

U.S. auto sales are expected to rise for a second straight quarter as automakers are able to ship more vehicles to dealers on time, analysts said, while focus will also be on watching out for signs of plateauing demand.

Vehicle production took a hit after the pandemic disrupted supply of semiconductor chips and other raw materials, hurting carmakers’ ability to meet the upsurge in demand for personal mobility. The companies have been playing catch-up ever since as the supply chain snags gradually ease.

But rising interest rates and fears of a recession may play spoilsport in an industry where most vehicle purchases are financed with loans, analysts say. The average transaction price of vehicles, too, has surged over the last one year.

“Consumers are facing credit uncertainty as rapidly rising interest rates have created barriers to entry for even the most qualified buyers,” said Jessica Caldwell, executive director of insights at auto research firm Edmunds.

Detroit giant General Motors Co said earlier this year it would halt production at its Fort Wayne Assembly truck plant in Indiana for two weeks to manage inventory.

The automaker is set to post a 15% rise in first-quarter U.S. sales, while Japanese rival Toyota Motor Corp’s sales are likely to fall nearly 10%, when they publish data beginning Monday, according to consultant Cox Automotive.

The current, eighth-generation Golf will get a comprehensive update next year. “That puts it in a great position until the end of the decade. Then we will have to see how the segment develops,” VW brand boss Thomas Schaefer told Automotive News sister publication Automobilwoche.

“If the world develops completely differently than expected by 2026 or 2027, then we can also launch a completely new vehicle again. But I don’t expect that to happen. So far, that’s not planned,” Schaefer said.

The Golf has been in production since 1974 and its name will be retained for a battery-electric vehicle.

“It’s clear that we will not be giving up iconic names like Golf, Tiguan and GTI, but will be transferring them to the electric world,” Schaefer said. “But with the Golf in particular, it has to fit the genes. Just calling any vehicle that doesn’t work. We won’t make that mistake,” he added.

All those chargers in China delivered about 21.3 terawatt-hours of electricity in 2022, about 0.25% of the country’s total electricity consumption, according to Hove, who analyzed data from the China Electric Vehicle Charging Promotion Alliance. While utilization of individual public chargers is low, they combined to deliver enough power in December alone to move each EV in China’s fleet about 1,000 kilometers (621 miles), suggesting that many drivers are using public facilities regularly, [senior research fellow at the Oxford Institute Anders] Hove said.

In many ways, the state of China’s charging infrastructure is the envy of the rest of the world. Two of the largest installers are massive state-owned utilities to whom public good can be as important as profit margins. The nation also has ubiquitous and easy-to-use mobile payment systems that make transactions hassle-free.

But the lack of utilization can still frustrate drivers. Hove, who frequently takes EV road trips across the country, has often encountered public chargers that are under maintenance or no longer working. In one instance in Beijing, he found two chargers were installed on a pedestrian-only street, an indication of how little attention some companies have paid to how the equipment could be used. [...]

A future in which EVs are dominant also might not necessitate the same scale of public infrastructure available to refuel internal combustion engines. At least half of EV buyers in China can access a private charger, according to Oxford Institute’s report.

“China has built out this huge charging network, and it’s not clear that that’s even needed,” Hove said.

The e-scooter ban won 89% of the votes according to the city hall Twitter account in what was billed as a rare “public consultation” that prompted long queues at ballot boxes around the city. However turnout in the referendum was low at 7.46% of registered voters.

Mayor Anne Hidalgo said she would respect the vote.

“From September 1, there will be no more electric scooters for rent in Paris,” she told a news conference late on Sunday.

Scooter operators pointed to the low voter turnout and said they hoped Hidalgo would seek a compromise.

“We remain hopeful that we can continue to work with Mayor Hidalgo to adopt sensible regulations instead of a ban on e-scooters, and avoid a step backward for Paris,” a spokesperson for Lime said on Monday.

A spokesman for Dott said the referendum was “heavily impacted by very restrictive voting methods” which led to an extremely low turnout heavily skewed towards older age groups.

On April 3, 1860, the first Pony Express mail, traveling by horse and rider relay teams, simultaneously leaves St. Joseph, Missouri, and Sacramento, California. Ten days later, on April 13, the westbound rider and mail packet completed the approximately 1,800-mile journey and arrived in Sacramento, beating the eastbound packet’s arrival in St. Joseph by two days and setting a new standard for speedy mail delivery. Although ultimately short-lived and unprofitable, the Pony Express captivated America’s imagination and helped win federal aid for a more economical overland postal system. It also contributed to the economy of the towns on its route and served the mail-service needs of the American West in the days before the telegraph or an efficient transcontinental railroad.