The managing director of The Future Fund LLC, Gary Black, has expressed his concerns that Tesla’s affordable Model Y trim level will not provide the company with significant sales growth. Black’s comments came after Tesla’s earnings call, where the company reported a decline in sales.
Black’s Comments
Black stated that the new affordable vehicle will be nothing more than a stripped-down Model Y at a lower price point. He believes that this will not expand Tesla’s total addressable market and will instead “cannibalize” the higher-priced trim levels. Black also blamed the 4% decline in Tesla stock during after-hours trading on the adjusted Earnings Per Share being “10-15% too high” despite the “42% YTD reduction”.
Response to Criticism
Black responded to criticism of his comments, stating that he was a huge advocate for the Model Y when it first came out, but the situation is “totally different” for consumers presently. He believes that a new Model Y trim would serve the same segment as the existing model, rather than expanding into a new market.
Why it Matters
Tesla’s sales have declined over the past year, with the company’s sales slipping for the seventh consecutive quarter in California. The latest data suggests that sales were down 21% in the state. Black’s comments echo his earlier statements that the new Tesla model would not be able to expand the company’s total addressable market.
Tesla’s Performance
Tesla reported a total revenue of $22.5 billion in its second-quarter earnings, a 12% year-over-year decline. The company’s sales have been affected by increased competition in the electric vehicle market and a decline in demand for its vehicles.
Conclusion
In conclusion, Gary Black’s comments suggest that Tesla’s affordable Model Y trim level may not provide the company with significant sales growth. The company’s decline in sales and revenue suggests that it needs to innovate and expand its product line to remain competitive in the electric vehicle market.
Additional Information
- Tesla’s second-quarter earnings report can be found here.
- For more information on Tesla’s sales and revenue, please visit here.
- To learn more about the electric vehicle market, please follow this link.
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