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Tesla faces criticism over new pricing strategy, self-driving promises

Tesla drew criticism over comments CEO Elon Musk made in regards to the automaker's lower prices and anticipated self-driving profits

Tesla is facing some pushback over its April 20 quarterly earnings call as investors and industry insiders contend with the automaker’s new stances on pricing and profitability.

Since December, Tesla has made multiple price cuts, a move that many investors worried would hurt the company’s profits. The automaker’s quarterly results failed to alleviate these concerns, as the data showed net income had fallen $810 million, or 24%, from the previous year. However, during the automaker’s earnings call, CEO Elon Musk defended the series of discounts, telling shareholders they were part of a new strategy emphasizing sales quantity over quality. “We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice versus a lower volume and higher margin,” he explained, arguing that better affordability would improve demand. To make up for lost revenue due to the price cuts, the entrepreneur said Tesla expected to make its money back on its autonomous driving packages.

These assurances failed to win over cautious investors, whose reaction caused the automaker’s stock price to fall roughly 7% the day after the earnings call, lowering the company’s market cap by $58 billion. As head of the U.S.’s number-two EV maker, Ford CEO Jim Farley offered his own perspective on the issue, arguing that Tesla’s aging vehicles were behind its tighter profit margins: “I think what [Musk is] going to learn is that product freshness matters a lot.”

Furthermore, Musk’s confidence in Tesla’s driver-assistance software, which he said would be capable of full self-driving later this year, does not appear to be shared outside of the CEO’s core fanbase. The entrepreneur has frequently made similar promises in the past, but despite the launch of the company’s $15,000 “Full Self Driving” (FSD) beta, none of its products have passed Level 2 capabilities. To qualify as a fully autonomous vehicle, Tesla would need to earn a Level 5 ranking.

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Colin Velez
Colin Velez
Colin Velez is a staff writer/reporter for CBT News. After obtaining his bachelor’s in Communication from Kennesaw State University in 2018, he kicked off his writing career by developing marketing and public relations material for various industries, including travel and fashion. Throughout the next four years, he developed a love for working with journalists and other content creators, and his passion eventually led him to his current position. Today, Colin writes news content and coordinates stories with auto-industry insiders and entrepreneurs throughout the U.S.

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