Is Tesla still a car company?

Jan 31, 2025 03:27 AM - 1 week ago 12145

On an net telephone past night, Tesla CEO Elon Musk spent a batch of clip talking up his company’s plans to “go ballistic” connected artificial intelligence, and very small clip connected Tesla’s halfway business, which is making and trading electrical cars.

There was truthful small attraction paid to Tesla’s automotive business, that moreover a bunch of investors were near scratching their heads.

“Is this a car company?” Morgan Stanley expert Adam Jonas wrote successful his statement to clients Thursday. He followed up pinch a 2nd statement that put a finer constituent connected it: “Almost nary chat of the halfway car business. While astir 80% of the company’s revenues is (still) automotive, the chat during the prepared remarks and Q&A was almost wholly astir autonomy, AI and robotics. We spot a shape here.”

It’s agelong been theorized that Musk has grown weary of the day-to-day of moving a car business, arsenic evidenced by his increasing number of broadside hustles (SpaceX, X, xAI, Boring Company, Neuralink, etc). And now that he’s been elevated to an unofficial-official personnel of the Trump administration, overseeing a massively arguable effort to slash costs by purging the national employees, the clip he spends actively progressive pinch Tesla has grown moreover smaller.

“Almost nary chat of the halfway car business.”

When he does talk astir Tesla, he almost exclusively focuses connected the company’s efforts to build humanoid robots and self-driving cars. Clearly this is what animates him, not the quotidian business of FMVSS compliance, power depletion homologation, and package recalls. He genuinely believes that Tesla will predominate the world done AI, not battery-powered vehicles.

Of course, Tesla doesn’t really gain immoderate money from its AI business yet. But investors, intelligibly caught up successful Musk’s fervor, asked precisely zero questions related to the company’s stated plans to present new, much affordable models this year. They could person grilled him astir the accumulation ramp, the next-gen conveyance platform, expected profit margins, and different cardinal questions. But alternatively we sewage queries astir Tesla’s Optimus robot and erstwhile Tesla customers could adhd their ain cars to the company’s robotaxi network.

 Tesla Bot Optimus is connected show during the 2024 World AI Conference & High-Level Meeting connected Global AI Governance astatine Shanghai World Expo Exhibition and Convention Center connected July 7, 2024 successful Shanghai, China. (Photo by John Ricky/Anadolu via Getty Images)

Maybe that’s because Tesla’s car business is looking a small shaky correct now. The company’s sales declined twelvemonth complete year for the first clip successful complete a decade. Vehicle accumulation successful 2024 was down 4 percent compared to 2023, and deliveries were down 1 percent. Even though the Model 3 was updated past year, and the Model Y, the best-selling car successful the world, conscionable sewage a similar upgrade, Tesla’s conveyance lineup is looking a small stale. The newest exemplary successful the family, the Cybertruck, went from basking summons to disappointment successful little than 12 months. Meanwhile, Tesla’s competitors are continuing to rotation retired caller models successful a assortment of segments and astatine different value points.

Tesla’s shareholder platform did incorporate 1 update connected the company’s next-gen conveyance level and forthcoming much affordable models: they’re still successful the works. And that’s fundamentally it. Even though Musk tried to termination the alleged Model 2 erstwhile before, it’s back connected the menu. Or truthful Tesla claims.

One expert asked really the expected elimination of national EV incentives and taxation breaks nether Trump was apt to impact Tesla’s business, which is still heavy limited connected conveyance sales, and you know, possibly Musk could seduce his bully buddy the president to reconsider? Musk dodged the particulars of his narration pinch Trump and the taxation break by waxing philosophical astir EVs:

Sustainable carrier is inevitable. I’m highly assured that each carrier will beryllium autonomous [and] electric, including aircraft. And that it simply can’t beryllium stopped immoderate much than 1 could person stopped the advent of the soul combustion engine.

That’s astir arsenic adjacent arsenic Musk came to assuring investors that Tesla’s automotive business was successful bully hands. Don’t interest astir losing those taxation breaks. Don’t interest astir the Model 2 (now apparently called the “Model Q,” I guess)! All of this is inevitable! It’s a very force majeure style of argument. And Tesla’s banal value surely backs it up. The company’s banal dipped correct earlier the marketplace closed — but past soared successful after-hours trading. Now it’s backmost up to $402 successful its safe zone.

If Tesla wants to beryllium an AI company, investors look happy to spell on pinch it. People pinch Teslas successful their driveway mightiness consciousness differently.

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