Tesla earnings preview: Watch this key metric—and don’t expect Musk to say much about Trump or robotaxis

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Greg McKenna
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There’s plenty of chatter about robo-taxis and the promise of AI ahead of Tesla’s second-quarter earnings call, scheduled for Tuesday after market. Investors may also wonder how cofounder and CEO Elon Musk’s recent political activity may affect the company’s future, particularly as his relationship with one of Tesla’s biggest markets—the state of California—continues to deteriorate.

Morningstar’s Seth Goldstein isn’t expecting many updates on either front. He’s eager, however, to hear whether Tesla is still on schedule to produce a more affordable vehicle, which he believes is crucial to the company’s chances of boosting falling deliveries.

“Of course, anytime you hear Elon Musk speak, there could be some unexpected topics,”
Goldstein said.

After a massive rally earlier this month, powered in part by robo-taxi hype and second-quarter delivery numbers that beat (low) expectations, Tesla’s stock rebounded from a disastrous first quarter and erased its year-to-date losses.

Consensus estimates have Tesla's diluted earnings per share for Q2 at $0.60, per Bloomberg, down from $0.91 in the same quarter last year. According to Bloomberg, options trading implies the stock could move about 8% in either direction after Tuesday's call. The company missed revenue and EPS estimates last quarter, but the stock still jumped in extended trading after Musk touted Tesla's AI potential and said the affordable vehicle could arrive earlier than expected.

Could Musk's politics hurt Tesla?

Shareholders might question, however, if Musk’s support of Republican presidential nominee Donald Trump, as well as his hostilities with California’s left-leaning government, could threaten Tesla’s growth. Musk announced last week that he was moving the headquarters of SpaceX and X Corp. (formerly Twitter) to Texas after California Gov. Gavin Newsom signed a new state law that bans school districts from requiring teachers to disclose a student’s gender identity or sexual orientation to their parents.

Tesla sales in California have fallen for three straight quarters, raising concerns about whether Musk is alienating potential customers in a state where the EV share of the new car market is nearly triple the U.S. average.

“I think that’s a very fair question,” Goldstein said. “I’m not sure if it will be asked.”

Then there’s the question of Musk’s support for a president who spent a portion of his speech at the Republican National Convention bashing the EV industry.

Trump has pledged to undo the Inflation Reduction Act that President Joe Biden signed into law in August 2022, which made Tesla customers eligible for as much as $7,500 in federal tax credits. Last year, Tesla discounted the price of its Model X by over $40,000 so buyers could take advantage of the credit.

Getting rid of these subsidies would clearly hurt Tesla, Goldstein said. The flip side, he said, is that their removal would likely be much worse for the competition, which perhaps explains why Musk is comfortable publicly calling for them to go.

Tesla received about $1.8 billion in production tax credits last year, more than three times what General Motors received. Ford isn’t eligible for the credits until 2025.

Will a cheaper vehicle boost Tesla's deliveries?

Another high-profile business name to get behind Trump, ARK Invest CEO Cathie Wood, has boosted the hype around Tesla’s plans for an autonomous taxi platform, saying it will be the catalyst for a roughly 10-fold increase in its share price.

Musk already announced the robotaxi unveiling has been postponed from August to October, though, so Goldstein isn’t expecting many more details.

“That leaves Tesla’s other growth driver as the affordable vehicle,” Goldstein said.

With deliveries down 5% year on year as of last quarter, he noted, the production of a car priced somewhere in the mid-$30,000 range could help Tesla reach a much larger market, where midsize SUVs like the Toyota RAV4 and Honda CR-V have sold very well.

During Tesla’s previous earnings call, Musk told investors production would probably begin “by early 2025, if not late this year,” per the Guardian. That would likely mean truly ramping up production in 2026, Goldstein said.

He’ll be waiting on Tuesday to see if Tesla gives any indications its sticking to that timeline.

This story was originally featured on Fortune.com