Tesla Profits Drop 55%

Original Article ↗ Hacker News Discussion ↗

Tesla’s latest earnings show a 55% drop in profit on a 9% revenue decline, prompting debate over whether the company’s high fixed costs, intensifying EV competition (especially from cheaper Chinese and European models), and fading pandemic-era margins are catching up with it. Commenters question Tesla’s product strategy and build quality, note the reputational impact of Elon Musk’s politics on its historically liberal customer base, and are skeptical that robotaxis or humanoid robots will justify the current valuation. Many argue the broader EV transition will continue regardless, with buyers increasingly considering rival brands or hybrids instead of Teslas.

Financial results and margins

  • Commenters note revenue down ~9% YoY but income down ~55%, with free cash flow negative and operating cash flow “disappeared.”
  • One analysis: gross margin barely fell and opex only rose modestly; main issue is high fixed costs from vertical integration, making profits highly sensitive to small revenue drops.
  • Some see this as reversion from COVID-era abnormal margins to more normal auto margins.
  • Several view the stock reaction (up on guidance about cheaper models/AI) as another meme-like disconnection from fundamentals.

Pricing, competition, and EV demand

  • Disagreement whether Model 3/Y are “one of the cheapest” EVs in US/EU: many list significantly cheaper EVs (Dacia, BYD, VW, Peugeot, Volvo, etc.).
  • Some argue Tesla still leads Western makers in scale, efficiency, and range-per-dollar; others say alternative EVs are now cheaper and often better built.
  • EV demand: 31% growth in 2023 seen by some as strong, but below industry expectations, especially for higher-priced models. Hybrids are gaining ground.

Brand, build quality, and user experience

  • Repeated anecdotes of poor fit and finish, worn interiors, and awkward ergonomics (e.g., removal of stalks, confusing turn-signal layout).
  • Others argue most buyers care more about brand and software than finish, but several counter that long-term perceptions of quality (as with German/Japanese brands) are critical and slow to build.

Musk’s behavior and political impact

  • Significant hostility toward Musk’s public statements (politics, culture-war tweeting, alleged antisemitism, transphobia), with many saying they will not buy Tesla while he is CEO.
  • Some argue this has alienated environmentally conscious/left-leaning buyers without attracting large numbers of truck‑oriented conservatives.
  • Others downplay CEO personality, focusing on product and industry leadership.

Robotaxis, Optimus, and AI pivot

  • Many skeptical of robotaxi timelines and business model: regulatory hurdles, liability, cleaning/maintenance, registration, peak-time demand mismatch.
  • Some see the robotaxi/AI narrative as a way to re-rate Tesla as a tech/AI company after car growth slows.
  • Others argue FSD miles and Waymo/Cruise show autonomy is progressing, and that even a small share of ride‑hailing TAM could be very lucrative.
  • Optimus humanoid robot claims (production soon, enormous economic upside) are widely viewed as overly optimistic; supporters emphasize incremental factory use first.

Product strategy: Cybertruck, Model 2, low-cost EVs

  • Cybertruck described by many as a “vanity project” or “toy” with limited mainstream appeal and weak towing/efficiency; some see it as targeting a niche status market.
  • Debate over whether Tesla truly prioritizes an affordable “Model 2”; reports in the thread alternately describe cancellation, delay, or an intermediate platform based on 3/Y.
  • Several think abandoning or delaying a global low-cost car and semi-truck in favor of AI/robotaxis is strategically risky.

Environment, alternatives, and “sustainable transport”

  • Some argue boycotting Tesla slows “transition to sustainable transport”; many respond that buying non‑Tesla EVs (or even hybrids, e‑bikes, fewer cars) advances the same goal.
  • A few claim keeping and lightly using existing ICE cars can beat new EVs environmentally if mileage is very low; others cite analysis that EVs overtake old beaters in ~2 years of typical usage.
  • One view: private cars of any type aren’t truly sustainable due to road wear, microplastics from tires, and land use.

Arson at Gigafactory Berlin

  • Discussed as a pylon arson attack cutting power to the plant and local residents for about a week.
  • Motives reported as protest over deforestation, groundwater use, and opposition to Tesla’s vehicle types; described as far‑left/anarchist activists.