Musk to face investor questions on Robotaxi plans during Tesla's earnings report

Investors and analysts will be scrutinising Tesla CEO Elon Musk on Wednesday when the electric automaker reports quarterly results, with investors expecting dramatic improvement over last year's results. Musk’s ambitious robotaxi plans will be in focus after a huge event last week at which most questions weren’t answered and saw Tesla shares fall.

Musk failed to answer a series of critical questions about how the self-driving vehicle works, and presented critical details that he did — like specifications on the striking black SUV that was revealed, or how many cars it will be for — during a very brief 20 minute presentation about the self-driving vehicle that left investors thirsty for detail about the company's core auto sales. Tesla's automotive sales profit margins are expected to decline, analysts say, due to rising incentives aimed at attracting electric vehicle buyers.

Demand for Tesla’s aging lineup has ceded to lower-priced EVs in China and traditional US automakers rolling out new vehicles, and the company may also see its first-ever annual drop in vehicle deliveries. Investors want to take a look at how these factors will bear on the company as a whole.

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Details of the robotaxi initiative and the progress of Tesla’s Full Self Driving (FSD) software will be key topics for the upcoming earnings call. Much of Tesla's USD 700 billion market valuation rests on Musk's promises that FSD will enable that robotaxi business. Under USD 30,000 and only entering production in 2026 — Musk has indicated the robotaxi could hit the market. He also outlined plans for unsupervised FSD operation to get underway in California and Texas next year.

But safety of the FSD system is also coming under scrutiny following reports of four crashes, including a fatal crash, and the US auto safety regulator is opening an investigation into 2.4 million Tesla vehicles with FSD software after concerns that the technology wasn't meeting the most crucial safety requirements for vehicles, the WSJ reported.

Analysts from Barclays have noted a shift in focus from the Cybercab event to Tesla's fundamental business metrics. Wall Street expects the company to report an automotive gross margin of 14.9% for the third quarter, slightly up from 14.6% in the previous quarter. Despite price cuts to boost demand amid rising interest rates, Tesla's efforts have met with limited success, raising concerns about its margin performance compared to traditional automakers.