Category: Business Insider

• Elon Musk said Tesla will get cheaper electric vehicles out sooner.
• The move came after Tesla lowered prices due to falling sales and increasing competition.
• Tesla's first quarter was marked by fewer deliveries, layoffs, and a stock rout.

Elon Musk dangled a long-awaited prize — cheaper Tesla models — in front of investors on Tuesday. It sent stock soaring.

In Tesla's highly anticipated first-quarter earnings call, CEO Musk talked about the company's efforts to accelerate the production of cheaper electric vehicles. Investors have been clamoring for the cars for months amid falling sales of current models.

Musk didn't give many specifics, like how much the cars will cost or exactly when they'll be available. But it was enough to calm investors, and Tesla's stock rose 13% in after-hours trading.

"If you have a great product at a great price, the sales will be excellent," Musk said on the call.

He said that Tesla plans to keep making its cars and prices more competitive. Carmakers around the world, including once-dismissive Musk, worry about Chinese EVs' low prices undercutting their sales.

Tesla's cheaper models will be produced on existing manufacturing lines. Production might start late this year or in early 2025, instead of the second half of 2025, Musk said.

Tesla's cheapest car in the US is the Model 3, which starts at $38,990. The average US EV costs $53,758. The company sold 220,910 of the Model 3 last year.

Analysts were cautiously optimistic about Musk's announcement.

"Sounds promising, but Tesla is becoming more of a show-me stock based on how many delays we've seen in previous roll outs," Jay Woods, the chief global strategist at Freedom Capital Markets, told Reuters. "If they can deliver, then this is a great development."

Days before earnings, the electric vehicle maker slashed prices of cars in key markets, including the US, China, and Europe.

Tesla has been teasing a car under $30,000 since 2020. Earlier this month, Reuters reported that the company was scrapping plans for a compact, $25,000 car. Musk denied the story.

Significant challenges and a plummeting stock

While a promise of cheaper cars relieved investors, Tesla's troubles are far from over.

During Tuesday's earnings call, analysts questioned Musk, who has leadership roles in at least five companies, about whether he was spread too thin. Tesla's head of investor relations announced his departure from the company during the call, making him the third senior executive to leave in the past week.

The first quarter of the year has been disastrous for the EV maker.

Tesla reported disappointing first-quarter deliveries earlier this month and went through a messy 10% global layoff last week. On Friday, Tesla recalled nearly 4,000 Cybertrucks because of faulty accelerators. Price cuts Tesla made on the weekend were reciprocated by Chinese EV rivals, who cut theirs even further.

Tesla's stock is down 42% year-to-date.

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• Daniel Ek said Spotify underestimated the impact of laying off 1,500 people in December.
• "It took us some time to find our footing," Ek told investors in an earnings call.
• The streaming giant had cut 2,300 jobs over three rounds of layoffs last year. 

Laying off 1,500 people in December ended up creating a "significant challenge" for Spotify, the company's CEO Daniel Ek said on Tuesday.

"Although there's no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we anticipated," Ek told investors in an earnings call.

But Ek quickly assured investors that the company has managed to overcome this challenge.

"It took us some time to find our footing, but more than four months into this transition, I think we're back on track," Ek added.

And it seems that Ek's decision might have paid off for Spotify.

On Tuesday, the streaming giant reported its earnings for the first quarter of 2024, where it revealed that Spotify had made a quarterly profit of 197 million euros, or $210 million. The company had incurred a loss of around $241 million in the same period last year.

Founded in 2006, the music platform has become a go-to spot for listeners hoping to enjoy the latest tunes.

On Saturday, Spotify announced that Taylor Swift's latest album, "The Tortured Poets Department," had become the platform's most-streamed album in a single day. Swift herself became the "most-streamed artist in a single day in Spotify history," the company said in an Instagram post.

"We've talked about 2024 as the year of monetization, and we're delivering on that ambition," Ek said on Tuesday.

"I feel good about the changes we are implementing and remain very confident in our ability to reach the ambitious plans we've outlined," he added.

Spotify's change in fortunes comes after the company laid off 2,300 workers over three rounds of layoffs last year. Besides cutting 1,500 jobs in December, Spotify laid off about 600 employees in January 2023 and another 200 staff in June.

The layoffs, Ek said in December, were necessary as the company needed to become "relentlessly resourceful."

"Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact," Ek wrote in a blog post at the time.

Ek isn't the only tech executive who has acknowledged the difficulties and benefits of cutting jobs.

In February, Meta CEO Mark Zuckerberg told Morning Brew Daily hosts Neal Freyman and Toby Howell that laying off tens of thousands of staff was "really tough."

"It was obviously really tough, we parted with a lot of talented people we cared about. But in some ways actually becoming leaner kind of makes the company more effective," Zuckerberg said.

Representatives for Spotify didn't immediately respond to a request for comment from BI sent outside regular business hours.

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• Baltimore officials are blaming the Francis Scott Key Bridge's collapse on the Dali's owner and manager.
• In a legal filing on Monday, they accused the ship of leaving port even after its alarms went off.
• The filing also accused the Dali's crew of failing to follow local navigation rules and being untrained.

City of Baltimore officials on Monday accused the owner and manager of the ship that crashed into the Francis Scott Key Bridge of allowing the vessel to set sail despite it being "clearly unseaworthy."

In a legal filing against Synergy Marine, the manager of the Dali, and Grace Ocean, the ship's owner, attorneys for the city accused both companies of being "grossly and potentially criminally negligent."

The allegations came in response to a petition filed in Maryland federal court by the firms, which are both based in Singapore, asking for their liability in the bridge disaster to be capped at $43.6 million.

Baltimore Mayor Brandon Scott and the city council are contesting the petition, asking for no limit to be enacted.

Their filing contains a litany of allegations blaming Synergy Marine and Grace Ocean for negligence and reckless management that resulted in the bridge's collapse on March 26.

"Reporting has indicated that, even before leaving port, alarms showing an inconsistent power supply on the Dali had sounded," the court petition reads. "The Dali left port anyway, despite its clearly unseaworthy condition."

City officials further accused those in charge of the Dali of deploying an "incompetent crew" that was "inattentive to its duties," lacked proper training, and "failed to comply with local navigation customs."

A spokesperson for Synergy Marine said it would be inappropriate to comment on ongoing court proceedings. Grace Ocean did not immediately respond to a request for comment sent by Business Insider.

The Singapore-flagged Dali struck a support pillar of the Key Bridge in the early morning of March 26 as it left the Port of Baltimore for Sri Lanka, causing most of the bridge's span to collapse into the Patapsco River.

Six construction workers who were repairing potholes on the bridge were killed.

Authorities found that the 984-foot ship lost power as it navigated toward the bridge, causing it to lose propulsion. The crew on board broadcast a mayday call just before impact, allowing traffic police to seal access to the bridge.

Two ship pilots, or local experts on the terrain and river, were on board the Dali then. These specialists typically advise the ship's master, who pilots the vessel, on navigating such waters and weather conditions. The 22 all-Indian crew on the Dali were unharmed.

The Key Bridge's collapse has deeply wounded Baltimore's economy, cutting off maritime traffic to and from the city's port — the ninth-largest in the US — and disrupting trucking routes. The port is estimated to bring about $15 million in economic activity daily.

"Tens of thousands of jobs rely directly on the Port," the city officials' filing said. There are concerns of a further ripple effect in the regional economy, with port workers made jobless now unable to spend at local businesses.

The National Transportation Safety Board, which is leading the cleanup of the bridge site and removing fallen containers from the Patapsco, is investigating the cause of the allision.

The FBI also opened a criminal investigation last week into whether any of the Dali's crew may have known about system issues on the vessel, The Washington Post reported.

Meanwhile, President Joe Biden has said that the federal government will fund the reconstruction of the Key Bridge, and has agreed to disburse some $60 million in aid to the region.

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• Elon Musk doesn't think Tesla should be viewed as just another auto company. 
• Musk told investors on Tuesday that Tesla's Optimus robots are its most valuable asset.
• "We should be thought of as an AI or robotics company," Musk said.

Tesla's Optimus robots could become the company's most valuable asset, says the company's CEO Elon Musk.

"As I've said before, I think Optimus will be more valuable than everything else combined," Musk said in an earnings call on Tuesday.

"Because if you've got a sentient humanoid robot that is able to navigate reality and do tasks at request, there is no meaningful limit to the size of the economy," he added.

During the call, Musk told investors that the Optimus can perform "simple factory tasks in the lab" before offering a rough timeline on when he thinks the robots would be rolled out.

"We do think we will have Optimus in limited production in the natural factory itself, doing useful tasks before the end of this year," Musk said. "And then I think we may be able to sell it externally by the end of next year. These are just guesses."

Musk's bullish remarks about Tesla's work in robotics come as the EV giant struggles with declining sales. On Tuesday, the company announced its quarterly revenue dropped by 9% year-over-year. This fall is Tesla's biggest revenue drop since 2012.

Earlier this month, the company revealed that it had delivered 386,810 cars in the first quarter of 2024, a 20.1% drop from the previous quarter. The company's performance in Q1 was also its worst quarterly performance since 2022.

Tesla's present challenges appear to have jolted Musk into high gear as he attempts to sell the viability of the company's works-in-progress.

Besides teasing a new robotaxi concept for its vehicles, Tesla also slashed its vehicle prices across multiple markets over the weekend.

Prices of Tesla's Model 3, S, X, and Y have been reduced by 14,000 yuan, or about $1,930, in China, a country where the carmaker is facing steep competition from local rivals like BYD.

"We should be thought of as an AI or robotics company," Musk told investors on Tuesday. "If you value Tesla as just like an auto company, fundamentally, it's just the wrong framework, and if you ask the wrong question, then the right answer is impossible."

In the past, Musk has tried to salvage the company's fortunes by tweaking prices and touting emerging technologies.

However, Musk has repeatedly set and then missed his own targets for when Tesla will bring self-driving cars to the masses. In 2019, Musk said he was "very confident" that Tesla would have 1 million autonomous robotaxis on the road by 2020.

Representatives for Tesla didn't immediately respond to a request for comment from BI sent outside regular business hours.

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• Tesla had a tough first quarter, reporting a drop in revenue during a Tuesday earnings call.
• But Tesla's woes are unlikely to deter its fervent fans from continuing to support the company. 
• Tesla customers are among the strongest brand loyalists out there. 

Tesla had a rough Tuesday.

The company reported a drop in revenue during its first-quarter earnings call, falling short of expectations and ushering in a dimmer outlook for the electric vehicle manufacturer.

But luckily for Tesla, the company's fans are a fervent bunch, unlikely to be deterred by one bad quarter.

During the Tuesday earnings call, Tesla reported a net income of $1.1 billion from January to March, which is down about 55% from last year. Stock in the company climbed more than 10% as a result of volatile late trading shortly after the call.

"This ultimately comes down to: Do you believe?" Gene Munster, a managing partner at investment company Deepwater Asset Management, told CNBC shortly after the earnings call, describing Tesla's dilemma.

"If you believe the future is going to be hybrid cars and it's going to take a long time — 20 years — to get to full electrification, the stock's not going anywhere," Munster said Tuesday.

Tesla CEO Elon Musk, for his part, hand-waved concerns about the low numbers during the call, instead doubling down on vague promises of the future of artificial intelligence at the company and a fully autonomous car.

Musk's mid-call musings seemed to satisfy investors enough, The Washington Post reported. The Tesla chief said the company was speeding up its production timeline on a much-anticipated more affordable car and fully committing to the autonomous "Cybercab."

"If you believe electrification — despite all of its troubles now — is going to accelerate," Munster told CNBC, Tesla is the "best-positioned company to deliver on that future around autonomy and electrification."

And Tesla customers tend to be devout believers in the promise of electrification. The company's brand loyalists have been described as "cult-like" in their dedication to the manufacturer and its vehicles.

"Ultimately, this company is going to survive to see the next generation vehicle…and see the rising tide of electrification," Munster said. "I'm still a shareholder. I'm still optimistic."

Tesla is no stranger to staging a successful comeback. The company was among the first few car manufacturers to reopen after the pandemic, marking several quarters in a row of growth and revenue rebound.

The company, however, is facing a slew of struggles in recent months including recent regulatory attention, a car recall, and multiple lawsuits.

But industry probes and factory recalls are hardly deterrents to the majority of Tesla zealots.

"I just believe in what they're doing from an innovation standpoint," Munster said.

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• The Senate passed a bill to provide aid to Ukraine, Israel, and Taiwan — and force a sale of TikTok.
• Three Democrats and 15 Republicans voted against it. It now heads to Biden's desk.
• Republicans opposed the Ukraine aid, while some Democrats took issue with Israel aid.

Billions in aid to Ukraine, Israel, and Taiwan — along with a bill to force TikTok's Chinese parent company to sell off the popular app — are headed to President Joe Biden's desk after months of delay.

The Senate passed the $95 billion package by a sweeping bipartisan margin on Tuesday, with 15 Republicans and three Democrats voting against the legislation.

Republicans generally voted against the package because of their long-standing opposition to Ukraine aid, while Democrats opposed the bill over the lack of conditions on Israel aid.

On Saturday, the House took separate votes on four individual components of the bill, a plan hatched by Speaker Mike Johnson that was designed to appease Republicans but also won plaudits from progressive Democrats.

That included a vote on a nearly $61 billion Ukraine aid bill, a more than $26 billion Israel aid bill, Taiwan aid, and a bill that combined an amended version of a previously approved TikTok bill that was combined with a bill allowing the US to seize Russian assets to pay for Ukraine aid.

37 House Democrats voted against Israel aid, while 112 House Republicans voted against Ukraine aid. 21 House Republicans voted against both packages.

The bill is broadly similar to a $95.3 billion aid package that passed the Senate in February, shortly after a bipartisan border deal collapsed in the face of opposition from former President Donald Trump and other congressional Republicans.

Most Republican senators — along with three Democrats — voted against that package.

But many of those Republicans, such as Sen. Lindsey Graham of South Carolina, decided to support the new bill on Tuesday, bringing an end to a months-long fight in Congress over foreign aid and border policy that exposed divisions within both the Democratic and Republican parties.

Here are the 3 members of the Democratic caucus who voted against the bill:

• Bernie Sanders of Vermont

• Jeff Merkley of Oregon

• Peter Welch of Vermont

Here are the 15 GOP senators who voted against the bill:

• John Barrasso of Wyoming

• Marsha Blackburn of Tennessee

• Mike Braun of Indiana

• Ted Budd of North Carolina

• Ted Cruz of Texas

• Bill Hagerty of Tennessee

• Josh Hawley of Missouri

• Ron Johnson of Wisconsin

• Mike Lee of Utah

• Cynthia Lummis of Wyoming

• Roger Marshall of Kansas

• Marco Rubio of Florida

• Eric Schmitt of Missouri

• Rick Scott of Florida

• JD Vance of Ohio

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• Elon Musk gave a vague answer when asked if he plans to reduce his role at Tesla in the coming years.
• Musk was speaking during a call on Tesla's first-quarter earnings on Tuesday.
• Musk previously said he wants to maintain a certain level of control to keep growing Tesla.

Elon Musk didn't give a straight answer on Tuesday when asked if he plans to take a step back from Tesla in the coming years.

The Tesla CEO was speaking on a call that followed the company's first-quarter earnings report, which came as the electric vehicle maker deals with a decline in sales. The report showed Tesla fell short of expectations in profits and revenue in Q1 of 2024 but did better than estimated in net gross.

During the call, Toni Sacconaghi, a Wall Street analyst at Bernstein, asked about Musk's future involvement with Tesla, noting the billionaire is currently leading several companies. In addition to serving as CEO of Tesla and SpaceX, Musk is also the owner and CTO of X, formerly known as Twitter, and the owner and founder of The Boring Company.

"You're leading many important companies right now," Sacconaghi said. "Maybe you can just talk about where your heart is at in terms of your interests, and do you expect to lessen your involvement with Tesla at any point over the next three years?"

Musk replied, "Tesla constitutes the majority of my work time, and I work pretty much every day of the week. It's rare for me to take a Sunday afternoon off, so I make sure Tesla is very prosperous."

"It is prosperous, and it will be very much so in the future," he continued.

The vague answer notably did not actually address whether or not Musk plans to roll back his involvement with Tesla in the future.

Musk and Tesla did not respond to a request for comment from Business Insider.

During discussions about his Tesla pay package in January, Musk suggested he would not want to keep growing Tesla without maintaining a certain amount of control over the company.

"I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can't be overturned," Musk wrote on X. "Unless that is the case, I would prefer to build products outside of Tesla."

Less than two weeks later, a Delaware judge struck down Musk's $55 billion Tesla pay package, which included Tesla stock options.

Tesla is now asking shareholders to approve the compensation plan, arguing Musk deserves it and that it is "critical to the future success of Tesla."

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• The Senate just passed a TikTok "ban"  as part of a larger foreign aid bill.
• Once Biden signs it into law, ByteDance will have 270 days to sell TikTok.
• Trump tried to institute a similar ban via executive order, but it was struck down by in court.

The Senate passed a multifaceted bill Tuesday evening that would effectively ban TikTok from the US app store once President Joe Biden signs it, as he has signaled he will. The final vote was 79 in favor and 18 opposed.

The House of Representatives passed a series of bills over the weekend to send foreign aid to Ukraine, Israel, Taiwan and humanitarian funding for the Gaza Strip. Tucked into the foreign aid bills was text forcing TikTok's parent company, ByteDance, to sell the social media service to an American one or face a ban.

The House passed a similar bill in March, pressuring ByteDance to divest in 180 days. The newer version gives ByteDance 270 days to divest, a decision that appears to have been enough to sway Senate Commerce Committee Chair Sen. Maria Cantwell.

Cantwell did not support the previous TikTok bill, saying she was unsure it could pass legal scrutiny. This is a problem other Senators have pointed out, given the legislation specifically identifies ByteDance by name.

Biden has said for months that he'll pass the legislation once it reaches his desk. In his last year in office, former President Donald Trump tried to force ByteDance to sell to an American company via executive order, but a federal district court struck down the order.

The bill's passage in the Senate comes after months of lobbying against it by TikTok — the app prompted its users to reach out to their representatives and voice their displeasure, and its CEO personally traveled to Washington, DC, to try to stop it — as well as reportedly China itself. Politico reported earlier in April that officials from the Chinese Embassy met with congressional staffers to voice their displeasure with the legislation.

TikTok has vowed to challenge the bill in court once Biden signs it.

Enacting the TikTok "ban" could hurt Biden's chances at reelection in November, given the app's popularity among younger demographics and the likelihood of a close final vote. Trump may have picked up on that, too — earlier in the year, he spoke against banning TikTok despite his actions while president.

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• When Summer Lee ran for Congress in 2022, she had to battle a wave of pro-Israel spending.
• That didn't happen this year, despite her initially appearing to be a top target.
• Lee easily defeated her primary challenger on Tuesday, likely assuring her reelection.

Going into this year, Rep. Summer Lee seemed likely to be a top target for pro-Israel groups.

The first-term "Squad" member won the 2022 Democratic primary for her Pittsburgh-area House seat by less than 1,000 votes after facing down millions of dollars in outside spending from a super PAC affiliated with the The American Israel Public Affairs Committee (AIPAC).

But that level of spending didn't materialize again this year, and Lee handily defeated Democratic primary opponent Bhavini Patel on Tuesday.

Both AIPAC and another key pro-Israel group, Democratic Majority for Israel (DMFI), opted to stay out of the primary. But that doesn't mean other progressives will go unscathed.

"The national pro-Israel community did not engage in this race, which means it's not really a serious test," DMFI President Mark Mellman told the Washington Post. "But there will be tests yet to come."

Pro-Israel groups have become the biggest opponents of progressives in Democratic primaries

The rise of the progressive left — spurred by Sen. Bernie Sanders's presidential campaigns and accelerated by shock victories by politicians like Rep. Alexandria Ocasio-Cortez — has brought with it a cohort of Democratic politicians who are more critical of Israel and sympathetic toward Palestinians.

That's increasingly been a challenge for groups like AIPAC, who have long worked to maintain a bipartisan consensus around support for Israel through lobbying and political fundraising.

Those groups began fighting back in 2020 and 2022, drawing on the support of deep-pocketed donors — many of which Republicans — to try to block progressive candidates from winning Democratic primaries across the country.

One of those progressive candidates was Lee, who was elected to the Pennsylvania State House in 2018 with the backing of the Democratic Socialists of America. Pro-Israel groups spent money against Lee not just in the primary, but in the general election as well.

Why that didn't happen this year

Lee, who called for a cease-fire soon after the October 7 Hamas attacks, initially seemed vulnerable in part due to anger from the local Jewish community in Squirrel Hill, where the Tree of Life Synagogue mass shooting took place in 2018.

That congregation's rabbi, along with several others, signed two different letters to the congresswoman denouncing her rhetoric on Israel.

But the politics of Israel within the Democratic Party shifted significantly in the intervening months, in large part due to the brutality of Israel's war in Gaza, which has killed more than 30,000 Palestinians.

The progressive forces backing Lee also ended up being stronger than those hoping to defeat her.

Lee's opponent Patel did receive roughly $612,000 in outside spending from a super PAC bankrolled by GOP billionaire Jeff Yass, a significant investor in TikTok's parent company. But that only proved to be a boon for Lee and her allies, who blasted Patel for benefiting from a GOP megadonor's largesse.

Meanwhile, progressive groups supporting Lee spent nearly $710,000, and on Sunday, Ocasio-Cortez came to Pittsburgh to rally with Lee.

Lastly, Lee — despite being significantly to the left of President Joe Biden — aligned herself closely with the president's agenda, including running on over $1 billion in federal funding that she helped deliver to the district, much of which was originally allocated under the Bipartisan Infrastructure Law.

That helped the congresswoman neutralize attacks from Patel, who sought to paint Lee as being insufficient loyal to Biden. The president even shouted out the congresswoman as one of the "folks who've had my back" during a recent visit to the city.

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• Oracle head Larry Ellison said Tuesday the company is planning a move to Nashville, Tennessee.
• The company relocated from Silicon Valley to Austin in 2020.
• Ellison said he now wants the company to be closer to the center of the healthcare sector.

Oracle is headed to Nashville.

Larry Ellison, the software giant's cofounder and chairman announced plans Tuesday for a "huge campus" in Nashville, "which will ultimately be our world headquarters."

"It's the center of the industry we're most concerned about, which is the healthcare industry," Ellison said at the Oracle Health Summit in Nashville, according to CNBC.

Oracle did not respond to a request for comment from Business Insider.

In 2020, in the thick of the pandemic, the company relocated from Silicon Valley — its home since 1977 — to Austin, Texas. At the time, the company said it would help offer workers more flexibility.

The announcement follows Oracle's recent shift to the healthcare industry. In 2022, the company bought the medical records company Cerner for about $28 billion.

Other health companies in the Nashville area include HCA, HealthStream, and Change Healthcare.

The company has already purchased office space in Nashville, according to The Wall Street Journal.

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