Elon Musk braces for bad Tesla results as EV price war rages

Elon Musk was supposed to be in India right now, but he’s postponed the high-profile trip—including his planned meeting with Prime Minister Narendra Modi—because of “very heavy obligations” at Tesla.

Those obligations presumably include being around to deal with the fallout of tomorrow’s Tesla quarterly results, which are expected to be the company’s worst in seven years, and shareholders’ understandable desire to know whether they should still be holding their breath for the Model 2—Tesla’s long-awaited budget EV, which was supposed to have been the culmination of the firm’s long-term mass-market strategy.

“If they stopped that, that is investment-thesis–changing,” Tesla investor David Baron warned last week, following rumors that Musk would pause plans for the $25,000 car in favor of a push for autonomous robo-taxis. “It would be a disaster of epic proportions,” added noted Tesla bull Dan Ives. There are a lot of investor nerves for Musk to calm, especially if he wants to revive his struck-down pay package—worth $56 billion—at Tesla’s annual meeting in a couple of months.

Tesla’s moribund share price has dropped 17% in the past week alone, thanks to a flood of bad news that’s included the laying off of a tenth of Tesla’s workforce, plus the humiliating recall of every shipped Cybertruck, to fix a poorly designed accelerator pedal that potentially turns the vehicle into what InsideEVs’ Rob Stumpf memorably described as “a 6,800-pound land missile.”

Also not helping matters: Musk’s decision over the weekend to slash prices of Teslas and their improperly named “Full Self-Driving” software, which is clearly an attempt to revive flagging sales. That decision has already had knock-on effects in China, prompting rival Li Auto to further discount its EVs and even provide rebates to those who recently bought them—thus knocking Li Auto’s already-struggling share price by over 8%. Chinese market leader BYD has already slashed its prices, sending its Seagull hatchback below the $10,000 mark.

According to Reuters, China’s state planners see the price war further intensifying this year. Tesla certainly isn’t the only one suffering here.

On the one hand, the planet needs these price cuts. It happens to be Earth Day today, and the electrification of transport is one of the few tangible ways in which technology is helping rather than hindering the battle against global heating. More EVs equals fewer carbon emissions, and lowering prices is one way to aid this essential transition.

But the fact remains that EV demand is currently lacking, at least compared with what automakers were hoping for. The price war is just one symptom of that situation. Another can be found in the decision by South Korean metals refiner Ecopro Innovation to cut production of lithium hydroxide, a critical material used in batteries, by a tenth. Bloomberg reported that move today, noting that CEO Anthony Kim only sees a rebound happening in the second quarter of next year.

So buckle up for another bumpy 12 months—and, if you’re a Cybertruck driver, get your ride to a Tesla dealer who can fix that accelerator pedal.

David Meyer

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This story was originally featured on Fortune.com