A Tesla earnings call is always a fun experience. More often than not, Elon lets some little tidbit slip that wasn’t part of the script, much to the delight of the audience and consternation of the company’s lawyers. We know there will be talk of deliveries and gross margins and earnings before interest and taxes. GAAP and non-GAAP figures will be thrown around and a few questions will be asked from the steely eyed financial analysts on the call.
The big question on many people’s mind is, will the price of Tesla shares rise or fall as a result? The stock is down about a third from its all-time high in January. Will Elon deliver the goods to make it go back up? For many who are not shareholders, it’s just fun and useful to see how the Tesla story is unfolding. Here are a few topics that may tell the tale.
Tesla has placed a huge bet on the Chinese market for electric cars, selecting Shanghai for its first new factory. But then there seemed to have been some bumps in the road for Tesla in that country this year. Or not.
First came news that Teslas had been banned from Chinese military installations because their cameras could inadvertently capture classified information. Then there were reports that sales were down significantly, something my colleague Johnna Crider exposed as false a few days ago. Then there was a minor recall for Chinese made Teslas that was a tempest in a teapot.
“The China growth story is the top of the list for Tesla,” Dan Ives, tech analyst with Wedbush Securities, tells CNN Business. “This is their key market. We believe 40% of their sales will come from there next year. I think that’s the linchpin to the stock going up or down.”
Regulatory Credits
One of the constant complaints about Tesla is that it makes more money selling zero-emission credits to other manufacturers than it does selling cars. If its net income for the second quarter exceeds those credits, that will be a significant milestone for the company. “That would throw one of the core bear arguments against the stock out the window,” Dan Ives says. The consensus estimate is that Tesla will report net income of more than $600 million. In the first quarter, it made $518 million from selling credits.
Bitcoin
In February, Tesla said it had purchased $1.5 billion worth of Bitcoin and would allow customers to pay for their cars using the digital currency. In April, the company announced it had netted $101 million from its Bitcoin transactions. The value of digital currencies can fluctuate wildly over short periods of time, which makes professional investors nervous.
For a while, Tesla stopped accepting Bitcoin payments, saying the platform used too much electrical power from fossil fuel sources. But now Elon says Bitcoin may soon be welcome again. Once again, Ives thinks dabbling in Bitcoin is a negative sign that worries investors, much like twisting the tail of the SEC or sparking up a phattie with Joe Rogen. Expect more on this topic to surface during the Q2 earnings call.
Supply Chain Concerns
It’s common knowledge that automakers around the world are struggling to manage a shortage of computer chips, the tiny devices that manage everything from blind spot detection to stability control and adaptive cruise control systems. Tesla is no exception. In addition, demand for lithium, nickel, and other raw materials to manufacture batteries is soaring as more and more manufacturers join the EV revolution. Analysts will be looking for information about how Tesla is managing its supply chains to control costs.
Gigafactories
Tesla is moving full speed ahead to bring its two newest factories in Germany and Austin online while expanding its production facility in Shanghai to produce the Model Y. That’s a lot for any company to manage. It says both Germany and Austin will begin producing automobiles this year before transitioning to full production early next year. Investors will be anxiously awaiting updates on both new factories during the Q2 earnings call.
The Cybertruck
In March, Elon tweeted that there would likely be an update about the Cybertruck during the Q2 earnings call, so we will be paying close attention to any news on that front. Last week we reported that Musk is unconcerned about whether his unconventional electric pickup truck will be a sales hit, saying he likes it even if no one else does. (You either love it or hate it.)
Update probably in Q2. Cybertruck will be built at Giga Texas, so focus right now is on getting that beast built.
With GM, Ford, and now Dodge saying they will have electric pickup trucks of their own soon, and the Rivian R1T set to debut in a few months, it will be interesting to see whether Americans will be able to tear themselves away from the traditional looking trucks they love or whether Tesla will trim its sails to make the Cybertruck more appealing to mainstream truck buyers.
The Supercharger Network
Last week, Musk tweeted, “We’re making our Supercharger network open to other EVs later this year.” Investors will be expecting to learn more about that announcement. Morgan Stanley auto analyst Adam Jonas wrote in a research note afterward, “By 2030, we conservatively estimate Tesla supercharging revenue of $2.9 billion, a figure which does not include any revenue from non-Tesla vehicles.” How much revenue could Tesla get from drivers of non-Tesla electric cars? That’s a question that is sure to be raised.
FSD
Another recent development is an announcement from Tesla that it will soon offer its “Full Self Driving” package on a subscription basis. This could be the biggest marketing bonanza since Coca-Cola decided to sell its elixir in bottles. Decades ago, the auto industry found out that leasing could unlock a torrent of new sales. Perhaps subscription services will have a similar impact on revenue. Lots of people might subscribe to a FSD package who would otherwise balk at spending $10,000 for it up front. People will want to hear more about this.
There will also likely be requests for more info on when the FSD V9 Beta will roll out to all Americans who paid for FSD. The last we heard, the answer was ~2 weeks — but that’s been the answer for ~7 months (if not more).
Tesla Semi
With everything else going on at Tesla, it’s easy to overlook the Tesla Semi that has been gestating for a few years now. Production should be beginning soon and investors will be hungry for details.
Energy Storage
The jury is still out on whether Tesla’s acquisition of SolarCity was a brilliant marketing move that fit perfectly with Tesla’s mission or naked nepotism designed to bail out two of Elon’s cousins (as some people suing Mr. Musk argue), but there is no question Tesla is one of the global leaders in grid-scale energy storage. Elon himself has said he expects energy storage will create as much revenue as Tesla’s car business. This whole topic is usually found somewhere toward the end of the official earnings report, but it is really the key to whether Tesla shares will become more attractive to investors in the short and medium term.
Check back later to see how many topics we guessed right about and which ones came up that we didn’t anticipate. We’re not perfect, but we’re usually pretty darn close about these things.
Oil prices eased on Tuesday as market participants weighed the possibility of an OPEC+ decision to further increase its crude oil output at a meeting later this week.
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U.S. crude oil futures rose about 4% on Monday after OPEC+ increased production at a steady rate, easing investor fears that the group might boost output even faster.
West Texas Intermediate futures rose $2.53, or 4.16%, to $63.32 per barrel. Global benchmark Brent was up $2.34, or 3.73%, at $65.12 per barrel.
The eight producers in OPEC+, led by Saudi Arabia, agreed to increase production by 411,000 barrels per day in July, the third consecutive month the group has boosted output at that rate.
“There were market concerns of a faster unwind process,” said Giovanni Staunovo, commodity analyst at UBS, told clients in a note Saturday. “For now, the oil market remains tight, indicating it can absorb additional barrels,” Staunovo said.
The electric motorcycle market is a small and highly interconnected one, with a limited amount of suppliers and an even smaller number of actual honest-to-goodness motorcycle manufacturers. While Covid-era progress led to a series of highly-funded rapid advancements and flashy announcements, the last few years have been hard on the industry as funding and excitement have both dwindled, resulting in a smaller number of big releases. So it makes sense that people would jump at news that Honda is now producing its first electric motorcycle and that you can already buy it. The only problem is that none of that is true – finally some real fake news.
In the last few days, a number of news outlets ran with a story claiming Honda was now producing and selling its first ever electric motorcycle, a bike known as the E-VO. While some articles presented a fairly grounded and accurate analysis of the situation, others jumped on the more clickbaity bandwagon.
Like many rumors, the story does have some truth to it. There is an interesting-looking cafe racer-styled E-VO bike that was just announced, and its logo does partially include a red Honda badge, but that’s where things start to go awry as some articles played a bit fast and loose with the facts.
The main issues with the story heard ’round the internet are that 1) Honda has already produced multiple electric motorcycles, 2) the E-VO isn’t really a Honda, and 3) you can’t actually buy the bike, at least not the way many headlines would have you believe.
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The Chinese launch of the Honda-Wuyang E-VO
To be fair, even Electrek wasn’t spared, with its own story repeating several dubious claims seen elsewhere around the internet, among other smaller mistakes such as a strange swipe at LiveWire for not producing DC fast-charging electric motorcycles, which it famously does.
But let’s break down each of the errors or flashy clickbait headlines that duped many journalists and electric motorcycle fans alike.
The first major issue is that the premise is wrong. Honda has built multiple electric motorcycles in the past, though generally smaller designs with step-through frames. The E-VO would be a new design direction, taking on an eye-catching cafe racer design, but let’s not forget that models like the all-electric Honda PCX Electric were launched back in 2018. In fact, Visordown strangely mislabeled a photo of a PCX Electric, referring to it as an E-VO in its own article a few days ago. (And to be fair, not everyone whiffed on this one, with outlets like RideApart and CycleWorld giving even-handed and accurate coverage to Honda’s e-moto efforts).
Second, this motorcycle isn’t even a Honda. If you look closer at the badging, you’ll see it’s labeled as “Wuyang Honda” with the first word obviously printed much smaller in the logo to obscure it in favor of Honda’s much stronger brand reputation. To put it simply, the E-VO is produced by the Chinese company Wuyang, in which Honda invested in as part of a joint venture. Wuyang-Honda is a Chinese company owned by the major Chinese automaker GAC. It does produce some Honda-developed motorcycles for the Chinese market (like the CB series, CBR, etc.), but it also produces its own domestic market-only models. The latter is what the E-VO is. It’s not a Honda and it’s not produced by Honda. It’s produced by Wuyang-Honda, which is a Chinese company partially funded by the Japanese company Honda to make money from the Chinese market. It’s similar to how Ducati doesn’t really make those Ducati electric bicycles, but rather engages in a licensing agreement that lets another company produce them and print a famous name on the side.
And that brings us to the third major issue glossed over in the E-VO launch – that you can’t really buy it. Well, some people can, but not you. At least, not unless you happen to be Chinese or living in China. As mentioned above, this isn’t a Honda motorcycle that you can buy at a Honda dealer. It’s a Wuyang motorcycle that was recently launched in China and only sold in China. It wasn’t designed for export and doesn’t meet any other international regulations or safety standards because it wasn’t designed for any other markets outside of China.
Electrek’s Take
I’ve been a fan of electric motorcycles for a long time, riding and covering them with excitement as I’ve watched the industry progress. I talk the talk and I walk the walk. I don’t even own a car, as my family gets around entirely on electric motorcycles, e-scooters, and e-bikes. I don’t intend to unfairly call out other news outlets or even my own colleagues, but I do think that accuracy in reporting on such a nascent industry is important.
Accuracy in reporting isn’t just about keeping the industry well-informed but also ensuring realistic expectations among the public. Just like all of those stories popping up a few years ago to the effect of “GM is producing a $14,000 electric pickup truck” turned out to be clickbait (they were electric mini-trucks produced in China, for the Chinese market, by Chinese companies in which GM invested), the E-VO has also turned into something of a white whale. For years, riders have begged major manufacturers like Honda to get on board with electric motorcycles. And so when there’s even an inkling of progress on that front, the story can get ahead of itself.
That isn’t to say that Honda won’t ever produce a full-sized e-moto or street bike. Perhaps the E-VO will sell well in China and Honda will look favorably upon Wuyang’s work there. But the moment when an honest-to-goodness Honda electric motorcycle lands is still years away, and no amount of wishful thinking or creative writing is going to change that.
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The French are saying “non, merci” to Tesla, as sales crashed to just 700 units in May – a level not seen in more than three years.
The Model Y changeover was clearly not the problem.
Last week, Tesla CEO Elon Musk claimed that the company has “no demand problem” and that even though Europe is its weakest market, “everyone is struggling in Europe, there’s no exception.”
France has just released its car registration data for May, confirming that the auto market is down 12%. However, Tesla’s sales were down even more than the rest of the market.
Tesla delivered only 721 vehicles in France in May – down 67% compared to the same period last year.
In Q1, Tesla blamed its poor performance on the lack of Model Y availability due to the design changeover, but it doesn’t have this excuse in Q2, which is now tracking below Q1 in Europe.
May was Tesla’s worst month of deliveries it has had in the last three years. It’s also even worse than any month of deliveries in the first quarter, despite the new Model Y now being in full production in Gigafactory Berlin and available in France.
Electrek’s Take
I’ll write a more comprehensive post about Tesla’s sales in Europe once we have data from more countries in May, but it’s not looking good.
Tesla blamed its terrible performance in Q1 on the Model Y changeover, but we are past that in Q2. Yet, April was worse than January, and now, it looks like May is going to be below February in the whole of Europe.
The only positive market so far is Norway, and that’s probably due to some of its large existing base of owners in the country updating to the new Model Y, but it will be interesting to see if it’s sustainable through out the rest of the year. I doubt it. Tesla benefited from the Model Y changeover, but I expect the brand damage will also be felt in the popular EV market.
This result in France in May is particularly interesting because it is even worse than April. I literally have to go back to Q2 2022 to find a quarter when Tesla had a worse second month of a quarter in France.
It is starting to look like demand collapse.
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