Musk's Tesla Eyes Robotaxi, Shares Up Despite Sales Dip

Key Takeaway

• Tesla's Q1 earnings fell by 9%, with auto sales down 13% from last year, marking its worst performance since 2012.
• Elon Musk's focus on AI and autonomous vehicle technology, including the announcement of a CyberCab and ride-hailing app feature, boosted Tesla shares by 13%.
• Despite skepticism over unfulfilled autonomy promises and legal challenges, Tesla plans to expand its Full Self-Driving system to China.

Tesla's Earnings Miss

Tesla Inc. reported a decline in its first-quarter earnings, marking its worst performance since 2012. Revenue fell by 9% year over year, and auto sales dropped 13% from the same period in 2023. The company also experienced a shift to negative free cash flow. Despite these challenges, CEO Elon Musk focused on the future, emphasizing Tesla's commitment to artificial intelligence (AI) and autonomous vehicle technology. He suggested that investors who doubt Tesla's ability to achieve autonomy should reconsider their investment in the company.

Focus on Autonomy and AI

Elon Musk reiterated Tesla's vision of transforming existing cars into self-driving vehicles, creating a fleet of dedicated robotaxis, and establishing a driverless transportation network. This vision was underscored by the announcement of new affordable electric vehicle models set to start production as early as late this year or early 2025. Musk's discussion of a future driverless network and the introduction of the CyberCab, along with a preview of ride-hailing in the Tesla app, fueled optimism among investors, leading to a 13% surge in Tesla shares in extended trading.

Challenges and Controversies

Tesla's ambitious goals have been met with skepticism due to past unfulfilled promises regarding full autonomy. Musk's claims from as early as 2015 about achieving full autonomy have yet to materialize. Additionally, Tesla faces legal challenges, including a complaint from the California Department of Motor Vehicles accusing the company of false advertising related to its Autopilot and Full Self-Driving (FSD) systems. Despite these hurdles, Musk announced plans to expand FSD geographically to China, pending regulatory approval.

Investor and Analyst Perspectives

The shift towards AI and autonomous vehicles has sparked debate among investors and analysts. Some view Tesla's focus on robotaxis and the unveiling of a dedicated model in August as positive, while others express concern over the company's strategic direction and the prioritization of robotaxis over mass-market vehicles. The anticipation of Tesla's robotaxi and the potential licensing of FSD features to another automaker highlight the company's commitment to autonomy amid market challenges.

Street Views

• Alex Potter, Piper Sandler (Neutral on Tesla):

  "No matter what, even if I got kidnapped by aliens tomorrow, Tesla will solve autonomy, maybe a little slower but it would solve autonomy for vehicles at least... I don’t know if it would win with respect to Optimus, or with respect to future products, but there’s enough momentum for Tesla to solve autonomy, even if I disappeared, for vehicles."

Management Quotes

• Elon Musk, CEO of Tesla:

  "If somebody doesn’t believe Tesla’s going to solve autonomy, I think they should not be an investor in the company. We will and we are." "When the car is not moving," Musk said,"there's potential to actually run distributed inference,” through the hardware that's in the cars. "Optimus will be more valuable than everything else combined because if you’ve got a sentient humanoid robot that is able to navigate reality and do tasks at request, there is no meaningful limit to the size of the economy." "If we have a super sentient humanoid robot that can follow you indoors and that you can't escape; we're talking Terminator-level risk yeah I’d be uncomfortable if there’s not some meaningful level of influence over how that is deployed."