Tesla's results were not electrifying, to say the least

Summary

Marketplace Morning Report Summary
Episode Title: Tesla's results were not electrifying, to say the least
Release Date: April 23, 2025
Host: David Brancaccio
Production: Marketplace by American Public Media

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Tesla's Disappointing Quarterly Results

David Brancaccio opens the episode with a critical overview of Tesla's latest financial performance.
“Tesla's results were not electrifying,” he states at [00:01], highlighting the company's underwhelming quarterly numbers.

Nova Safo delves deeper into the specifics, revealing that Tesla's auto sales plummeted by 20% and profits slashed by 70%.
“Tesla's first quarter results were quite bad, which is unsurprising considering the blowback and protests at Tesla dealerships over Elon Musk's cost-cutting work at the Trump administration,” Safo explains at [00:27].

Elon Musk's Strategic Shift and Investor Response

During an analyst call, Elon Musk announced a strategic pivot in his focus, committing to spend more time dedicated to Tesla and less on his endeavors with the Trump administration. This move has influenced investor sentiment, with Tesla's stock experiencing a pre-market surge of 6.5% despite the poor earnings.

Musk discussed the impact of tariffs on Tesla, emphasizing his stance on trade policies:
“The tariff decision is entirely up to the President of the United States. I will weigh in with my advice with the President, which he will listen to my advice, but then it's up to him, of course, to make his decision. I've been on the record many times as saying that I believe lower tariffs are generally a good idea,” Musk stated at [01:23].

This position aligns Tesla with the broader auto industry in Detroit, which recently urged the Trump administration to reconsider the 25% auto tariffs set to take effect next month.

U.S.-China Trade Tensions and Tariff Implications

Brancaccio transitions to the broader economic landscape, noting President Trump's softened stance on the U.S.-China trade war. The President indicated a potential reduction in the tariffs imposed on China, which had previously soared to 145%. This development comes amid businesses grappling with the unpredictability of tariff fluctuations and other policy changes.

Challenges in Consumer-Oriented Sectors

The episode highlights the uncertainty facing consumer-oriented companies as they attempt to forecast sales and profits. Randy Burt, an analyst with Alex Partners, emphasizes the importance of providing accurate guidance to meet or exceed expectations:
“Offer guidance that they believe they can meet or better yet beat in their next quarterly results,” Burt advises at [02:26].

However, Caleb Silver from Investopedia notes a "great lack of visibility" in the current economic climate, making it challenging for companies to predict consumer behavior:
“There is a great lack of visibility,” he comments at [02:50]. Silver points out that businesses are uncertain about whether the resilient American consumer will continue to spend or start cutting back due to rising prices.

Housing Market Snapshot: New Construction Trends

Shifting focus to the housing market, Brancaccio reports that while the number of new houses completed increased by 10% year-over-year, the construction starts in March dropped by 14%.

Henry Epp, Marketplace's housing market correspondent, provides context:
“The number of new single-family housing starts projects that began construction dropped by 14% in March,” he states at [04:14].

Donnie Wills, a general contractor in Austin, Texas, attributes the slowdown to reduced consumer confidence:
“Homeowners are scared watching their 401ks and things like that diminish, so they're less likely to spend cash on renovations and building new houses,” Silver explains at [04:41].

Tariffs remain a concern, with materials costs increasing. Robert Dietz, Chief Economist at the National Association of Homebuilders, notes:
“Builders in our surveys have reported that their building material suppliers have typically raised prices such that it increases their construction costs per single-family home by about $11,000,” Dietz reveals at [05:07].

Regional Impact and Builder Strategies

The Sun Belt region faces particular challenges, as Charlie Docherty, a senior economist at Wells Fargo, observes:
“Demand has probably fallen short of the supply that builders have brought to market over the past year,” Docherty explains at [05:42]. This oversupply may force builders to reduce prices, presenting potential opportunities for buyers who can afford new homes.

In response to the downturn in new construction, contractors like Donnie Wills are pivoting towards home renovation projects as a more affordable alternative for consumers and a steady revenue stream:
“It keeps the employees busy. It keeps the subcontractors busy... at least it keeps those companies up and alive,” says Silver at [06:22].

Looking Ahead

As the episode wraps up, Brancaccio hints at upcoming reports from major consumer companies like Pepsi, Chipotle, and Southwest Airlines, which will provide further insights into sales, profits, and future strategies amidst the current economic uncertainty.

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Notable Quotes:

• “Tesla's results were not electrifying.” — David Brancaccio [00:01]
• “The tariff decision is entirely up to the President of the United States...” — Elon Musk [01:23]
• “There is a great lack of visibility.” — Caleb Silver [02:50]
• “Builders... have typically raised prices such that it increases their construction costs per single-family home by about $11,000.” — Robert Dietz [05:07]

This episode of Marketplace Morning Report provides a comprehensive overview of the current challenges facing Tesla, the broader automotive industry's tariff concerns, the volatile consumer market, and the fluctuating housing sector. Through expert analysis and direct quotes from key industry figures, listeners gain insightful perspectives on navigating the intricate landscape of today’s economic environment.

Transcript

[David Brancaccio]

Tesla's results were not electrifying. I'm David Brancaccio in Los Angeles. It was a downbeat Elon Musk yesterday explaining crummy quarterly results for his electric car company Tesla. Musk told his investors he'll be spending less time doging and more time doing his private sector work. Tesla Stock is up 6 1/2% in pre market trading right now. Marketplace's NovaSafo is here with more.

[Nova Safo]

Yeah, no way of sugarcoating the actual numbers, David. Tesla's first quarter results were quite bad, which is unsurprising considering the blowback and protests at Tesla dealerships over Elon Musk's cost cutting work at the Trump administration. Tesla's auto sales were down 20%. Profits were down a whopping 70%. And what's moving markets this morning is that Elon Musk in an analyst call promised that starting sometime next month, he will spend just a day or two per week working with the Trump administration and more of his time will be dedicated to Tesla.

[David Brancaccio]

Now, topic one in the car and truck business, import taxes, tariffs. He addressed that.

[Nova Safo]

Yes, he did. And he said in the past that he expects Tesla to be less exposed to tariffs and the disruptions that they would cause. But the company acknowledged yesterday that they would still take a hit. And on the call at one point Musk, unprompted, took a pause, then side and then he said this.

[Elon Musk]

The tariff decision is entirely up to the President of the United States. I will weigh in with my advice with the President, which he will listen to my advice, but then it's up to him, of course, to make his decision. I've been on the record many times as saying that I believe lower tariffs are generally a good idea.

[Nova Safo]

And in that message, Elon Musk is in agreement with much of Detroit's auto industry which sent a joint letter to the Trump administration this week urging them to reconsider the 25% auto tariffs, David, which are set to kick in next month.

[David Brancaccio]

All right, Nova, thank you. President Trump yesterday sounded more dovish on the US China trade war, saying the tariffs he raised on China, 145% quote, will come down substantially. We've been hearing from businesses about how tough it is to plan given tariff to ing and froing and other policy shifts. This week we'll get sales, profits and hints about the road ahead from some consumer oriented companies. Pepsi, Chipotle, Southwest Airlines, marketplaces, Savannah companies.

[Randy Burt]

Offer guidance that they believe they can meet or better yet beat in their next quarterly results, says Randy Burt, an analyst with Alex Partners.

[David Brancaccio]

Generally, though, when you miss expectations, your stock price goes down, and usually very quickly.

[Randy Burt]

So there's a lot riding on the narratives companies share about where they're headed. But right now, says Caleb Silver with Investopedia, we are at a time where.

[Caleb Silver]

There is a great lack of visibility.

[Randy Burt]

For all companies trying to forecast their outlook, but especially those that compete for our discretionary dollars. Silver says they're trying to predict when the resilient American consumer will break under rising prices and stop splurging on travel and takeout.

[Caleb Silver]

That's why you're hearing so many companies in the discretionary sector say, we just can't provide a forecaster. We have two different paths that this.

[Randy Burt]

Could go one set of guidance for if American consumers just keep spending, and another for if we start to tighten our belts. I'm Savannah Peters for Marketplace.

[David Brancaccio]

President Trump after going after Federal Reserve chair Jerome Powell late last week and early this week. This included calling Powell a major loser and posting his termination could not come fast enough. Trump said yesterday he has no plans to fire Powell, but saying he wished Powell would be more active in lowering interest rates. Snapshot now on the housing market with sales figures from newly built places due later today, the number of new houses completed was up 10% compared to March a year ago, but new construction faces headwinds. Here's Marketplace's Henry Epp.

[Henry Epp]

The number of new single family housing starts projects that began construction dropped by 14% in March. That metric can be volatile month to month, but Selma Hepp, chief economist at Cotality, says at this time of year.

[Nova Safo]

We would generally see an increase in starts in March of this year. Actually this is very unusual to see.

[Henry Epp]

The weather is warmer, but the customers just aren't there, says Donnie Wills, a general contractor in Austin, Texas.

[Caleb Silver]

Homeowners are scared watching their 401ks and things like that diminish, so they're less likely to spend cash on renovations and building new houses.

[Henry Epp]

Many potential buyers, he says, are nervous that lumber and other materials will get more expensive over the course of their building project, thanks to the president's tariffs. Will says he has not seen his costs go up yet, but others surveyed by the national association of Homebuilders have Robert Dietz is the group's chief economist.

[Robert Dietz]

Builders in our surveys have reported that their building material suppliers have typically raised prices such that it increases their construction costs per single family home by about $11,000.

[Henry Epp]

Dietz says builders reported seeing fewer inquiries from prospective buyers, less traffic to their model homes and websites.

[Robert Dietz]

I think that's A reflection that the consumers have kind of taken this wait and see approach, which comes at a.

[Henry Epp]

Tricky time in certain markets. The Sun Belt has seen lots of new homebuilding in recent years. Charlie Docherty is a senior economist at Wells Fargo.

[Charlie Docherty]

What, you know, you're kind of seeing now is that, you know, demand has probably fallen short of the supply that builders have brought to market over the.

[Henry Epp]

Past year, which means more builders in those regions may cut prices. So if you're a prospective buyer who can afford it, Doherty says, I think.

[Charlie Docherty]

This is a potentially good opportunity to get into the new home market, but.

[Henry Epp]

It'S not exactly the kind of environment that'll encourage developers in those areas to build even more new homes. Donnie Wills in Austin, Texas, is doing a lot more home renovation projects this year, a cheaper option for his customers and a way to keep bringing in some revenue.

[Caleb Silver]

Yeah, it keeps the employees busy. It keeps the subcontractors busy. You know, it may not be, you know, where they're hiring, you know, 10, 15, 20 more guys to do the project, but, you know, at least it keeps those companies up and alive and.

[Henry Epp]

Hopefully hanging on until new home construction picks up again. I'm Henry Epp for Marketplace, and in.

[David Brancaccio]

Los Angeles, I'm David Brancaccio. Marketplace Morning Report, APM American Public Media.

[Janelie Espinal]

If there's one thing we know about social media, it's that misinformation is everywhere, especially when it comes to personal finance. Financially Inclined from Marketplace is a podcast you can trust to help you get serious about your money so you can build a life you've always dreamed of. I'm the host, Janelie Espinal, and each week I ask experts important money questions, like how to negotiate job offers, how to choose a college that you can afford, and how to talk about money with friends and family. Listen to Financially Inclined wherever you get your podcasts.