Tesla’s move towards artificial intelligence and self-driving technology
It is well-known that Elon Musk views Tesla (TSLA) as more than merely an electric car manufacturing company.
In April 2024, while presenting Tesla’s earnings report for the first quarter of the year, Musk firmly advised investors to view the company as an “AI robotics company.”
“If you consider Tesla merely an automobile company, it’s an incorrect perspective,” stated Musk. “Posing the wrong question makes it impossible to find the correct answer.”
Jump ahead to July 23, and Musk’s outlook remains the same.
“According to him, the primary value of Tesla lies in its autonomy. He believes that other factors are not nearly as significant in comparison to autonomy.”
“I suggest that anyone who doubts Tesla’s ability to market autonomous vehicles should not keep Tesla stock and should sell it instead. Conversely, if you believe that Tesla will succeed in selling autonomous technology, you should invest in their stock. Other queries are essentially irrelevant.”
Tesla Inc. cars in a parking area. Tesla’s deliveries have faced challenges due to changes in consumer purchasing patterns.
Responses from analysts and the effects on the market
The statements made during the earnings call elicited a range of responses from the analysts who participated.
Certain analysts continued to hold a positive outlook, such as Dan Ives from Wedbush, who reaffirmed his “outperform” rating in a note released on July 24.
He thinks that Tesla moving away from electric vehicles signals the beginning of a much larger trend in the future.
Ives wrote that, in their opinion, the upcoming stage of Tesla’s expansion revolves around autonomous vehicles, robotaxis, and AI, and they believe that this vision is imminent for Musk and his team.
“Musk announced a new date for the historic robotaxi launch, designating October 10th as Robotaxi Day. This marks the start of the AI era at Tesla, which we estimate to be worth trillions in the coming years.”
- Porsche and Mercedes take different paths at the electric vehicle intersection.
- A Fisker-like issue is impacting a car manufacturer renowned for its quality.
- A police officer stops a Waymo robotaxi and is met with neither a driver nor any passengers.
On the other hand, Seth Goldstein from Morningstar interprets the statements made during the earnings call in a different way.
In his analysis note released on July 14, he stated that he considers Tesla shares to be “slightly overvalued,” noting that “management did not provide specific details” regarding its ‘affordable vehicle.’
Moreover, he indicated that although the company is developing autonomous vehicle technology or robotaxis, they “believe Tesla might encounter regulatory delays in gaining approval for robotaxis or only receive approval for limited deployments, resulting in minimal additional revenue in the next few years.”
Automotive specialists are also doubtful about Tesla’s major shift towards artificial intelligence. Significantly, this new focus comes at the cost of other Tesla products, particularly one that could enhance the overall sales of electric vehicles.
In a statement to TheStreet, Collin Woodard, a contributor to Jalopnik, expressed that the long-anticipated $25,000 ‘affordable’ Tesla seems “like something Musk mentions to appease those who continue to see Tesla as a legitimate car manufacturer.”
Nevertheless, with the majority of attention directed towards other projects, the concept of a more affordable car seems unrealistic.
“According to Woodard in his conversation with TheStreet, ‘It’s important to recognize Tesla’s challenges. Manufacturing cars is inherently difficult, and producing an affordable electric vehicle in Australia that costs less than the Model 3 will be even more so. If the CEO keeps redirecting resources towards robotics and AI, it’s no shock that this might be one of [Musk’s] lowest priorities.’”
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