Tesla's upcoming quarterly earnings report will give investors and analysts an opportunity to question CEO Elon Musk on the company's robotaxi plans, following a recent unveiling that left many details unanswered and led to a drop in Tesla's share price.

The robotaxi event, featuring a brief 20-minute introduction by Musk, did not allow enough time for questions. This lack of interaction left many stakeholders concerned about Tesla's strategy for the future of its autonomous vehicles.

Much of Tesla's $700 billion valuation is tied to Musk's promise that the company's Autopilot software will serve as the basis for a robotaxi business, with production expected to begin in 2026 at a price point below $30,000. Musk also said that unsupervised operation of Tesla's Full Self-Driving (FSD) software could start next year in California and Texas.

However, concerns about Tesla's autonomous software remain. The U.S. auto safety regulator recently opened an investigation into 2.4 million Tesla vehicles equipped with FSD software after reports of four collisions, including a fatal crash in 2023.

Despite these issues, Tesla reported that its cars have driven over 2.57 billion kilometers using FSD. The company is also offering interest-free financing for customers purchasing the FSD package with a Model 3 or Model Y.

Competition and declining deliveries impact market position

Tesla is expected to report its first-ever annual drop in deliveries, as its aging lineup of electric vehicles faces increasing competition from more affordable EVs in China and newer models from traditional U.S. automakers.

This context has led some analysts, such as those from Barclays, to shift their focus away from the robotaxi initiative, emphasizing instead that Tesla's immediate priority should be on solidifying its core fundamentals.

The upcoming quarterly report is also expected to reflect a decline in profit margin on car sales, mainly due to incentives offered to attract electric vehicle buyers. Wall Street analysts predict a 14.9 percent automotive gross margin, excluding regulatory credits, for the third quarter, which is slightly above the 14.6 percent recorded in the previous quarter.

Tesla has employed price cuts and low-cost financing, particularly in China, to stimulate demand but has seen mixed results.

(With input from Reuters)