Tesla shares edge higher ahead of quarterly results

FILE PHOTO: The company logo is pictured on a Tesla Model X electric car in Berlin, Germany, November 13, 2019. REUTERS/Fabrizio Bensch/File Photo

(Reuters) – Shares of Tesla edged higher on Tuesday ahead of the electric car maker’s first-quarter results, with analysts expecting its lowest gross profit margin in more than six years.

The stock was up 0.7% at $143 in premarket trading ahead of the report, due after the close of trading.

CEO Elon Musk will likely face pointed questions from investors during the post-results conference call about the fate of the so-called Model 2, a low-cost vehicle he had promised in January would be available in 2025.

Reuters exclusively reported earlier this month that Tesla had scrapped plans for the model and shifted focus to building a self-driving robotaxi on the same small-car platform.

Musk initially posted on social media that “Reuters is lying,” but has yet to identify any inaccuracies or clarify the fate of the model. Investors had pinned hopes for sales growth on the Model 2.

The billionaire had also been expected to meet India’s Prime Minister Narendra Modi on Monday and announce major investments in an auto factory which was expected to produce a small, affordable model. Musk postponed at the last minute, citing “very heavy Tesla obligations.”

Tesla’s sales growth is slowing, which is expected to weigh heavily on Tuesday’s results.

The automaker earlier this month reported an 8.5% decline in deliveries and rising inventories. Over the weekend, it announced the latest in a series of price cuts globally on the Model 3, Model Y and other models, further eating into margins.

Several analysts expect Tesla’s annual deliveries to fall for the first time in 2024 after years of double-digit growth. The company warned in January that delivery growth would be “notably lower” this year, signaling that price cuts would be insufficient to lift demand.

Tesla shares have lost about 43% so far this year, and is among the worst performers on the S&P 500 index.

Wall Street expects Tesla’s automotive gross margin excluding regulatory credits to be 15.2%, according to 20 analysts polled by Visible Alpha, down from 19% a year earlier and the lowest since the fourth quarter of 2017.

Analysts on average see March-quarter revenue down 5.05% to $22.15 billion, according to LSEG data.

Musk has predicted the imminent arrival of fully autonomous cars for years, but may still be years from delivering, given the steep engineering and regulatory challenges.

He has also raised more questions with recent social media posts about Tesla’s self-driving vehicle strategy. Musk recently teased a “Robotaxi unveil” on “8/8,” presumably meaning August 2024, and later posted that going “balls to the wall” on autonomy was a “blindingly obvious” move.

(Reporting by Noel Randewich in Oakland, California; additional reporting by Aditya Soni; Editing by Varun H K)