Tesla does not throw cheap models in the trash

The e-car manufacturer saw turnover and profit drop more than analysts had expected, but investors seem mainly reassured that the company still wants to produce a cheap model.

Tesla

came up with weaker than expected results, but the stock shot up more than 10 percent in after-hours trading.

The global market leader in electric cars saw sales drop by 9 percent to $21.3 billion, while analysts expected sales of $22.3 billion. Earnings per share also halved to $0.45, compared to the consensus of $0.52. Note that the market forecasts already contain some negative news. The gross margin was higher than expected at 17.4 percent.

But for investors, the weaker than expected figures did not outweigh the positive news that the company is not throwing its plans for cheaper models in the trash. The company wants to accelerate that process, while many analysts feared that Tesla had shelved plans to fully focus on a robot taxi service.

But during the analyst call, Musk seemed to hint that making models cheaper goes hand in hand with the idea of ​​the self-driving robot taxi service. ‘The core of our story is that we will eventually have a lot of cars on the road that can drive autonomously.’ A large fleet of cars also provides a large amount of driving data that can be used to make autonomous driving possible more quickly.

“In the future you will be able to call up a car via your smartphone, after which it will pick you up independently,” the CEO said. ‘That could be a car owned by Tesla itself, but it could also be owned by a Tesla owner who is not using the vehicle at the time and wants to lend it out.’ Cars can thus be used for many more hours per week at the same cost, while they are now often left unused in the parking lot for long periods of time.

The problem with Musk’s story is that there is skepticism among investors and analysts about the feasibility of autonomous driving. For those doubters, the CEO has a clear message: ‘anyone who does not believe that Tesla will solve autonomous driving should not invest in us’.

“But we’re going to get it done,” says a confident Musk. He therefore has great confidence in the current version 12.3 of the FSD (Full Self-Driving) service to which users can subscribe. ‘Anyone who wants to understand our company should first try it out. If you don’t do that, you don’t understand Tesla,” the CEO said. With FSD, the car drives completely itself, but the law requires the driver to remain alert to intervene if necessary.

To accelerate the arrival of fully autonomous driving, the group is investing heavily in AI. “We now no longer have any obstacles to training models,” it said. Tesla has purchased large quantities of AI chips for this purpose in recent months. Also in the field of applying AI models (inference in the jargon), the company is very strong, according to Musk, because the company had to develop its own AI hardware (the FSD chip) to run the AI ​​models needed for autonomous driving.

Analysts seem to be talking about the results and the subsequent call. “The news that Tesla is coming up with new models faster and does not have to set up new production lines was unexpectedly positive news,” said Morgan Stanley analyst Adam Jonas.

The sharp climb in after-hours trading does little to make up for investors who invested in Tesla at the beginning of this year. Since New Year, the share has lost more than 40 percent, making Tesla the worst-performing member of the broad barometer S&P500 in 2024.