Elon Musk is years behind on his ambition to render Tesla's cars fully autonomous. He is now saying in no uncertain terms that he is willing to bet the company’s profit margins on making it happen.
Mr Musk said on a conference call that Tesla has the wherewithal to sell cars at “zero profit” and then earn immense sums later off driverless software.
The trouble with that for investors? His predictions since at least 2019 that autonomous Teslas are just around the corner have not panned out.
“We’re the only ones making cars that technically we could sell for zero profit for now, and then yield actually tremendous economics in the future through autonomy,” Mr Musk said on April 19.
“I’m not sure how many of you will appreciate the profundity of what I’ve just said, but it is extremely significant.”
The challenge Mr Musk has had turning driverless visions into reality isn’t stopping him from going forward with markdowns that threaten to set off a price war.
The Austin, Texas-based company has lowered the cost of its top-selling Model Y by 29 per cent in the span of just a few months. That has dented the company’s margins and worried investors who are concerned about deteriorating profits.
The dream of a truly self-driving car has animated the car industry for years, and Tesla’s chief executive has been one of its loudest proponents.
But the company has yet to deliver on promises of robotaxis dominating the roads.
Tesla offers a system it calls Full Self-Driving that, contrary to its name, merely assists human drivers who are fully responsible for operating the vehicle and must keep their hands on the wheel and eyes on the road.
The company charges customers $15,000 for the optional system and defers some of that revenue because it is not a finished product.
It won’t be until the feature lives up to its billing — something Mr Musk claimed may happen this year.
“Elon Musk dipped into the well and recycled prior comments around FSD being complete by year-end, demand outstripping supply and vehicles being an appreciating asset over time as full self-driving becomes a reality,” Jeffrey Osborne, a Cowen analyst, said in a note recapping the Tesla chief executive's comments.
“We question all of these assumptions.”
Tesla has begun to recognise some of its deferred revenue, including $324 million in the fourth quarter of last year — by far the most ever.
But even with that bigger-than-usual haul, the car maker has been recognising less deferred revenue than it has forecast in regulatory filings.
At $639 million, its projection for 2023 is the lowest in almost four years.
Tesla did not say in its earnings release or investor call last week how much deferred revenue it recognised in the first quarter. The figure should show up in its 10-Q filing due in the coming days.
Seth Goldstein at Morningstar Research interpreted Mr Musk’s zero-profit comment as “more of a theoretical”, but said the broader strategic goal of making money from selling software services to existing customers makes sense.
Tesla unveils the new semi-electric truck - in pictures
“Elon’s point is that the greater proportion of people you can get in a [Tesla], the more potential software purchasers there will be,” Mr Goldstein said.
“And then over time, that can become a very profitable and valuable business because it’s very high margin.”
Chief financial officer Zach Kirkhorn indicated Tesla had not abandoned the idea of making money on the cars it sells, telling analysts that reinvestment funded by cash generated from product sales is “very important for us”.
However, the company’s cash flow fell to a two-year low in the first quarter.
Other car manufacturers are closely watching the EV market leader’s moves as they increase production of their own battery-powered vehicles.
How far Tesla is willing to go to slash prices — and margins — remains a wild card.
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
UAE SQUAD FOR ASIAN JIU-JITSU CHAMPIONSHIP
Men’s squad: Faisal Al Ketbi, Omar Al Fadhli, Zayed Al Kathiri, Thiab Al Nuaimi, Khaled Al Shehhi, Mohamed Ali Al Suwaidi, Farraj Khaled Al Awlaqi, Muhammad Al Ameri, Mahdi Al Awlaqi, Saeed Al Qubaisi, Abdullah Al Qubaisi and Hazaa Farhan
Women's squad: Hamda Al Shekheili, Shouq Al Dhanhani, Balqis Abdullah, Sharifa Al Namani, Asma Al Hosani, Maitha Sultan, Bashayer Al Matrooshi, Maha Al Hanaei, Shamma Al Kalbani, Haya Al Jahuri, Mahra Mahfouz, Marwa Al Hosani, Tasneem Al Jahoori and Maryam Al Amri
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
the pledge
I pledge to uphold the duty of tolerance
I pledge to take a first stand against hate and injustice
I pledge to respect and accept people whose abilities, beliefs and culture are different from my own
I pledge to wish for others what I wish for myself
I pledge to live in harmony with my community
I pledge to always be open to dialogue and forgiveness
I pledge to do my part to create peace for all
I pledge to exercise benevolence and choose kindness in all my dealings with my community
I pledge to always stand up for these values: Zayed's values for tolerance and human fraternity
Herc's Adventures
Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5
More from Rashmee Roshan Lall
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
Florence and the Machine – High as Hope
Three stars
Skoda Superb Specs
Engine: 2-litre TSI petrol
Power: 190hp
Torque: 320Nm
Price: From Dh147,000
Available: Now
The%20specs
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The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
RESULTS
5pm: Handicap (PA) Dh80,000 (Turf) 2,200m
Winner: Jawal Al Reef, Fernando Jara (jockey), Ahmed Al Mehairbi (trainer)
5.30pm: Handicap (PA) Dh80,000 (T) 1,600m
Winner: AF Seven Skies, Bernardo Pinheiro, Qais Aboud
6pm: Maiden (PA) Dh80,000 (T) 1,200m
Winner: Almahroosa, Fabrice Veron, Eric Lemartinel
6.30pm: Maiden (PA) Dh80,000 (T) 1,200m
Winner: AF Sumoud, Tadhg O’Shea, Ernst Oertel
7pm: Wathba Stallions Cup Handicap (PA) Dh70,000 (T) 1,200m
Winner: AF Majalis, Tadhg O’Shea, Ernst Oertel
7.30pm: Handicap (TB) Dh90,000 (T) 1,400m
Winner: Adventurous, Sandro Paiva, Ali Rashid Al Raihe
Series info
Test series schedule 1st Test, Abu Dhabi: Sri Lanka won by 21 runs; 2nd Test, Dubai: Play starts at 2pm, Friday-Tuesday
ODI series schedule 1st ODI, Dubai: October 13; 2nd ODI, Abu Dhabi: October 16; 3rd ODI, Abu Dhabi: October 18; 4th ODI, Sharjah: October 20; 5th ODI, Sharjah: October 23
T20 series schedule 1st T20, Abu Dhabi: October 26; 2nd T20, Abu Dhabi: October 27; 3rd T20, Lahore: October 29
Tickets Available at www.q-tickets.com
Stat Fourteen Fourteen of the past 15 Test matches in the UAE have been decided on the final day. Both of the previous two Tests at Dubai International Stadium have been settled in the last session. Pakistan won with less than an hour to go against West Indies last year. Against England in 2015, there were just three balls left.
Key battle - Azhar Ali v Rangana Herath Herath may not quite be as flash as Muttiah Muralitharan, his former spin-twin who ended his career by taking his 800th wicket with his final delivery in Tests. He still has a decent sense of an ending, though. He won the Abu Dhabi match for his side with 11 wickets, the last of which was his 400th in Tests. It was not the first time he has owned Pakistan, either. A quarter of all his Test victims have been Pakistani. If Pakistan are going to avoid a first ever series defeat in the UAE, Azhar, their senior batsman, needs to stand up and show the way to blunt Herath.
