When Tesla releases its first quarter earnings this afternoon, the company’s CEO Elon Musk will field the usual questions about new products, new factories, and progress toward its futuristic vision of self-driving cars and robot workers. But Musk will also face increasingly urgent questions about its current state of affairs — and why everything seems to be going to shit.

Earlier this month, the company reported its first year-over-year sales drop in four years, a sign of rougher waters ahead. Tesla’s stock has fallen more than 40 percent since the start of the year, including a 13 percent drop in the last week. The company laid off over 14,000 employees last week, 10 percent of its global workforce — which could end up being closer to 20 percent when all’s said and done, according to Bloomberg. Today’s earnings report is expected to include Tesla’s lowest profit margins in six years, a sign that rampant price-cutting continues to exact a toll.

Much hope was pinned on the company’s forthcoming affordable EV, the so-called $25,000 “Model 2.” But then Reuters reported that Musk has canceled the project, preferring to sink the company’s resources into a fully autonomous robotaxi. (Musk called the Reuters report “lies” but has yet to affirm any support for the low-cost model.)

“Not quite betting the company, but going balls to the wall for autonomy is a blindingly obvious move,” Musk wrote on X, in response to a fan account pretending to be in disbelief that he would “bet” the company on robotaxis. “Everything else is like variations on a horse carriage.”

Layoffs, diminishing sales, a cloudy future, a distracted boss — all of these factors seem to signal a company in dire straits. Even the Cybertruck, Tesla’s great stainless steel hope, is being recalled over a faulty accelerator pedal. Much like its polarizing electric truck, Tesla seems to be stuck barreling straight ahead, pedal to the metal, without noticing that the road ahead is under construction.

“While we have seen much more tenuous times in the Tesla story going back to 2015, 2018, 2020..this time is clearly a bit different as for the first time many long time Tesla believers are giving up on the story and throwing in the white towel,” Wedbush analyst and longtime Tesla bull Dan Ives writes.

Tesla remains the world’s most valuable automaker with a market capitalization of about $468 billion. It’s still the biggest name in electric vehicles, with 51 percent share of the market in the US, according to Cox Automotive. But that’s down from 65 percent in 2022, as more automakers beef up their EV lineups with viable alternatives and Tesla’s competition heats up.

But more models haven’t translated to more demand. Almost 269,000 electric vehicles were sold in the US in the first three months of 2023 — a 2.6 percent increase year over year but a 7.3 percent decrease from the previous quarter, according to Kelley Blue Book. Price remains a major obstacles, as does charging and, of course, politics.

Musk warned of a slowdown, but the steep decline still took a lot of people by surprise. (Ives called it a “disaster.”) Tesla’s sales dropped 13 percent in the first quarter, compared to Q1 in 2023. Meanwhile, its biggest competitors, like BMW, Mercedes, Hyundai, and Kia, saw EV sales go up by double or even triple-digits. Ford, for example, saw Q1 sales of its battery-electric vehicles rise 86 percent over last year, for a total of 20,223 EVs — although that number dipped 22 percent compared to the fourth quarter of 2023.

In China, where Tesla helped create a market for electric vehicles, the company is now losing to many of the country’s domestic manufacturers. Tesla recently announced aggressive price cuts in China, which is the largest EV market in the world. And the company was briefly dethroned as the global EV leader by BYD, which sells all kinds of electric models, many of which are more affordable than Tesla’s.

Part of the problem could be Tesla’s lineup. An analysis of 26 global automakers found that the company has the oldest lineup based on when its models were first released. Also, the company only sells battery-electric vehicles, while its legacy auto industry competitors sell a mix of electric, hybrid, and gas vehicles. Hybrids have proven to be an important bridge for many consumers who want to go electric but have concerns about making the switch.

But while current sales may have softened, most experts say that the future is unquestionably electric. Gas-powered vehicles are a major contributor to planet-warming carbon emissions and curtailing their sale would be an enormous boon in the fight against climate change. And policy changes, including the US’s recent adoption of stricter emissions standards, will push automakers to go all-electric in the years ahead.

Tesla was the first company to prove there was a market for electric vehicles. But recently, it has been slow to innovate. And Musk’s leadership has come under question — especially as he has acquired new companies and taken on new projects, spreading himself remarkably thin in the process.

And now the company’s big bets appear to be flopping. The Cybertruck rollout has been marred by problems, culminating in last week’s hasty recall. Musk reportedly canceled the low-cost Model 2 in favor of the upcoming robotaxi — despite repeatedly failing to make good on his promise for a fully driverless vehicle.

Tesla has been forced to recall its two main driver-assist systems, Autopilot and Full Self-Driving, in the face of increased government scrutiny over the company’s autonomy claims. The families of Tesla drivers who have been killed in crashes involving Autopilot have sued the company for wrongful death. And Musk’s tenure as head of X, formerly Twitter, has alienated many of Tesla’s progressive-leaning customers, who have watched in horror as he promotes right-wing conspiracy theories on the platform.

Musk clearly wants to conquer the world. At the company’s last shareholder meeting, he introduced the idea of a “fully sustainable Earth” and positioned Tesla — and himself — as the most qualified to lead us there.

What he didn’t introduce was a new model, which was a huge disappointment for many of the company’s boosters on Wall Street. That was a stark reminder that for all of Musk’s bluster and claims about Tesla really being an AI company, it’s still just a car company.

While other companies are pursuing important innovations like lighter, more powerful batteries and recycling techniques that can shrink the auto industry’s carbon footprint, Tesla is putting it all on the line for an “apocalypse-proof truck” and a full suite of vaporware robots. Oh, and a $56 billion payout that a judge rejected and even the company’s top investors think is a trash idea.

Tesla’s grip on the EV market is slipping. If Musk can’t articulate a clear and positive vision for Tesla, it could slip even further.

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