...just proving again why Elon Musk is a true master of spin with a visionary twist.
...but if Elon can really pull this one, he will be a genius because the idea of ownership of Tesla FSD that can be redeployed (into Tesla's Robotaxi fleet) to earn income when not in use is a Robotaxi AirBNB version. That can keep sales of his EV up while transforming the transportation landscape into Robotaxi FSD (fully self drive).
...BUT first, we all know Musk can tell his wonderful stories but not able to deliver on time. His FSD technology is far from perfect, having caused a number of deaths and unlikely to receive approval anytime soon.
...STILL, it is enough to distract markets attention away from its declining EV sales and boost confidence to cause its stock price to rise +13% in after hours trade.
Will Musk now deliver the ‘greatest value appreciation in history’?
Elon Musk has a new vision: AI-fuelled autonomy allows Tesla to move beyond its past as a carmaker or energy company to become a new style of tech giant.
Apr 24, 2024 – 9.16am
This was one for the believers.
After delivering a stinker of a March quarter earnings report – big misses on revenue, earnings and an 87 per cent rise in inventory as electric vehicles (EV) sales slowed around the world – Tesla founder Elon Musk used an investor call to talk up the company’s growth ambitions on Wednesday.
This was Musk in full pitch-man mode: lots of blue sky, little detail.
Musk moved to assuage concerns that Tesla had abandoned its plan to build a cheaper, smaller car, known as Model 2, by promising that a more affordable vehicle could be rolling off the production line as soon as the end of this calendar year, and definitely ahead of the previously announced target of the second half of 2025.
Just as importantly, Musk declared Tesla has figured out how to build this new model on its existing production lines, which should limit capital expenditure and allow Tesla to shift capacity to the more affordable end of the market with EV sales under pressure globally.
Autonomous vision
Now, Tesla has a long-standing habit of missing deadlines Musk sets, as the reality of manufacturing catches up with his promises. Nonetheless, the soothing news on Model 2 was largely responsible for Tesla’s shares surging 10 per cent in after-hours trade.
With the Model 2 doubts seemingly addressed, Musk moved on to this big pitch: Tesla can unleash “the biggest asset valuation appreciation in history” by deploying its much-hyped autonomous driving technology across a fleet of millions of vehicles.
While Musk talks about this stuff like it’s a sure thing, this is, in effect, another big “trust me” moment from the billionaire.
The argument here isn’t new. If Tesla can develop its full self-driving technology to a point where vehicles can be fully autonomous, then every new car it sells, and every existing car it has on the road, can potentially become part of a massive fleet of Robotaxis. You can use your Tesla for 10 hours a week, then put it into the Robotaxi fleet for another 50 hours a week, alongside Tesla-owned Robotaxis.
This would turn Tesla into a combination of Uber and Airbnb, Musk said, adding the sheer amount of artificial intelligence computing power it will need to develop could also make it like a version of Amazon Web Services, whereby its AI capacity is rented out.
“People didn’t expect that AWS would be the most valuable part of Amazon when it started out as a bookstore,” Musk said.
Here was the latest and greatest unified theory of Tesla: AI-fuelled autonomy allows it to move beyond its past as a carmaker or energy company to effectively become a new style of tech giant.
“Really, the way to think of Tesla is almost entirely in terms of solving autonomy, and being turned on that autonomy for a gigantic fleet. And I think it might be the biggest asset value appreciation in history when that happens,” he said.
“If somebody doesn’t believe Tesla is going to solve autonomy, I think they should not be an investor in the company. We will and we are.” Theory confronts reality
The theory is exciting, and you can see why Musk is determined to push harder on autonomy than he is on a more affordable Model 2; it was notable that Tesla’s presentation on Wednesday featured mock-ups of the Robotaxi app, but no images of the Model 2 design.
But while Musk talks about this stuff like it’s a sure thing, this is, in effect, another big “trust me” moment from the billionaire.
For example, he dismissed a question on the regulatory challenges of getting autonomous driving approved with scorn.
Once upon a time, elevators had human operators, who would get tired and make mistakes, and now they are automatic, Musk said.
Regulators, he argued, will similarly realise autonomous cars are safer than human-driven vehicles and will have no choice but to give them the greenlight.
Again, the theory is good, but investors need to ask themselves what reality looks like.
Can you see widespread government backing for autonomous cars before 2030? Or is 2040 more likely?
Chanticleer has no idea, but the question of how this blue sky should be incorporated into Tesla’s already bullish valuation – even after its 40 per cent share price decline this year – is a real one.
Because while investors wait for the future, they need to deal with a present that looks very tricky – falling revenue, falling earnings, falling margins and soaring inventory.
Musk spoke on Wednesday of cost relief as traditional carmakers scale back their EV ambitions; batteries and other critical components are becoming cheaper.
But Tesla’s weak guidance for sales across the rest of 2024 – where it called for a “notable” slowdown in growth – suggests investors are in for more near-term pain before Musk’s autonomous vision becomes reality.
