In a recent quarterly call, Tesla executives addressed questions about the company’s future road map and the stability of automotive gross margins. CEO Elon Musk and CFO Zach Kirkhorn provided insights into these topics while maintaining Tesla’s traditional stance of not commenting on future product announcements.
Avoiding Unforeseen New Product Announcements
During the call, Kirkhorn reminded investors that Tesla does not disclose information about its future road map. This response came in answer to a question about potential upcoming energy products from the company. By taking this stance, Tesla aims to prevent any unexpected new-product announcements by Musk.
Automotive Gross Margin Stability
One investor posed a question regarding the stabilization of automotive gross margins, especially after the decline in the second quarter due to Tesla’s price reductions. To this, Musk humorously replied, “Oh, man. Where’s that crystal ball again?” He went on to express his belief that full self-driving capabilities would greatly impact the numbers and referred to Tesla as an “epic long-term investment.”
Supporting Musk’s sentiments, Kirkhorn agreed with the CEO and emphasized the importance of generating sufficient funds to continue investing in the company. He highlighted the intense focus of the technical teams on developing a portfolio of products and technologies.
Updated Margin Guidance
During a previous quarter, when asked for more information on margin guidance, Musk pointed out that macroeconomic conditions play a significant role. However, he expressed optimism about middle or end of next year, depending on various factors. Kirkhorn expanded on this, stressing the importance of managing the day-to-day aspects of the business while also investing in the future of 2024 and 2025, as mentioned by Elon Musk.
Overall, Tesla remains committed to advancing its product lineup and investing in innovative technologies as it looks towards the future.
RW Baird & Co. analyst Ben Kallo expressed confidence in Tesla, maintaining his outperform rating on the company despite the sudden departure of CFO Zach Kirkhorn. Kallo’s optimism suggests that he is not overly concerned about the transition and believes that Tesla is well-positioned for the future.
The longevity of senior executives under CEO Elon Musk has been a topic of discussion. Stephen Diamond, an associate professor of law at Santa Clara University, noted that surviving for four years under Musk is no easy feat. He compared the high turnover rate to the fungible nature of lawyers, suggesting that CFOs may face similar challenges.
Speculation arises that Kirkhorn may have approached Musk with retirement plans, leading Musk to ask him to reconsider. However, Kirkhorn remained firm in his decision to leave, disappointing Musk in the process. Gary Black, managing partner at the Future Fund and a Tesla investor, shared this insight on X, formerly known as Twitter.
As Kirkhorn exits, investors are now left wondering if Tesla’s new CFO, Taneja, will be able to bring a slight sense of restraint to Musk’s actions. Kirkhorn had previously played a role in reining in Musk’s potentially wild statements and forecasts. The departure prompts questions regarding the future direction of the company under Taneja’s leadership.
While it’s important not to place too much emphasis on the near-term implications of Kirkhorn’s departure, Tesla remains focused on ensuring its positioning for long-term success. The transition presents an opportunity for growth and adaptation, as the company continues striving to thrive in a post-macroeconomic landscape.