EV (electric vehicle) giant Tesla (NYSE: TSLA) held its 2023 annual shareholder meeting yesterday. The stock is down 50% since the last meeting which was held in August. Here are the key takeaways from the event.
Tesla shareholders re-elected Robyn Denholm as the chairman and Elon Musk as the CEO. They also elected former Chief Technology Officer JB Straubel as an independent director.
However, shareholders rejected a proposal calling upon the company to do a succession planning with Musk saying he won’t leave as Tesla CEO anytime soon.
Musk called Twitter a “distraction”
Markets have been concerned about Musk’s association with Twitter which he acquired in October last year. The billionaire admitted that Twitter indeed has been a “short-term distraction” but added that he needed to do a “major open-heart surgery” on the social media company to make it viable.
Musk has made several changes at Twitter including the pivot to paid verifications. However, he now seems to have changed his thoughts on advertising. It became apparent when he hired NBC Universal advertising executive Linda Yaccarino to lead Twitter.
During the shareholder meeting, he said, “I guess I should say ‘advertising is awesome and everyone should do it.” Musk added that even Tesla would “try a little advertising and see how it goes.”
Demand for Tesla cars
On multiple occasions, Musk has said that demand for Tesla cars is quite strong. However, its frequent price adjustments – after which Model 3 now starts at just under $40,000 in the US – tell a different tale.
Musk has spoken against advertising multiple times and said that Tesla does not need to advertise its products.
In a 2019 tweet, he said, “Tesla does not advertise or pay for endorsements. Instead, we use that money to make the product great.”
Notably, while other automakers spend aggressively on advertisement, Tesla has so far relied on Musk to market its cars and does not even have a marketing team.
Musk blamed higher interest rates for slowing down car sales
Musk said that higher interest rates are dampening the demand for cars and stressed: “Tesla is not immune to the global economic environment.”
During the Q1 2023 earnings call, Musk talked about the uncertain economic environment and predicted “stormy weather for about 12 months.” The billionaire has been predicting a US recession for almost a year now and has said that Fed’s rate hikes would amplify one.
During the Q1 earnings call and said “every time the Fed raises the interest rates, that’s equivalent to increasing the price of a car. It makes the cars less affordable because people are able to buy cars as a function of what they can afford on a monthly basis.”
He added, “So that’s — so it’s just almost directly equivalent to a price increase is any kind of interest rate increase.”
Musk said Cybertruck deliveries to begin in 2023
Musk reiterated that Tesla would begin Cybertruck deliveries later this year. The company unveiled its Cybertruck pickup in 2019 but it is running behind schedule. During the Q1 2023 earnings call, Musk said, “we continue to build Alpha versions of the Cybertruck on our pilot line for testing purposes” while adding “As with all new products, it will follow an S curve, so production starts out slow and then accelerates.”
During the shareholder meeting, Musk said that Tesla should be able to deliver upto half a million Cybertrucks annually once the production ramps up.
He also said that Tesla Roadster – originally set to go into production in 2020 – would go into production in 2024.
Meanwhile, Musk said that Tesla Model Y would be the “No. 1 selling car on earth this year.” The model was the best-selling car in the US in the first quarter after excluding pickups.
Musk on Tesla Energy business
During the shareholder meeting, Musk said that sales growth of “big batteries” is higher than that in the automotive segment.
In Q1 2023, Tesla’s Energy revenues rose 148% YoY to $1.53 billion and accounted for 6.5% of the revenues which is a first-quarter record.
Previously, Musk predicted that the Energy business would become even bigger than the automotive business.
During the Q1 earnings call, he clarified that the Energy business might become bigger than the auto business in terms of “total gigawatt hours deployed” even as it’s a possibility that automotive revenues might be ahead of the Energy segment.
Musk on China
In an interview with CNBC post the shareholder meeting, Musk suggested that China would attempt to integrate Taiwan and said “There’s some inevitability to the situation.”
Commenting on its impact on the global economy, Musk said, “The Chinese economy and the rest of the global economy are like conjoined twins. It would be like trying to separate conjoined twins. That’s the severity of the situation. And it’s actually worse for a lot of other companies than it is for Tesla. I mean, I’m not sure where you’re going to get an iPhone, for example.”
There have been concerns about Tesla’s relationship with China and reports suggested that the company hasn’t been able to secure permissions to expand its China Gigafactory. During the interview, Musk said, “There are some constraints on our ability to expand in China” without specifying.
Meanwhile, Tesla stock is trading marginally higher in US post markets after the shareholder meeting. The stock is nonetheless down in half from its all-time highs as markets get wary of the valuations of EV stocks amid slowing growth and the price war.