Is Tesla Still A Car Company?

On an nett 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 mini clip connected Tesla’s halfway business, which is making and trading electrical cars.

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

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

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

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

Of course, Tesla doesn’t really summation immoderate money from its AI business yet. But investors, intelligibly caught up successful Musk’s fervor, asked precisely zero questions related to nan company’s stated plans to coming new, overmuch affordable models this year. They could personification grilled him astir nan accumulation ramp, nan 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 nan company’s robotaxi network.

Maybe that’s because Tesla’s car business is looking a mini shaky correct now. The company’s income declined twelvemonth complete twelvemonth for nan 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 nan Model 3 was updated past year, and nan Model Y, nan best-selling car successful nan world, conscionable sewage a akin upgrade, Tesla’s conveyance lineup is looking a mini stale. The newest exemplary successful nan family, nan Cybertruck, went from basking summons to disappointment successful small than 12 months. Meanwhile, Tesla’s competitors are continuing to rotation retired caller models successful a assortment of segments and astatine different worth points.

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

One master asked really nan expected elimination of nationalist EV incentives and taxation breaks nether Trump was apt to effect Tesla’s business, which is still dense constricted connected conveyance sales, and you know, perchance Musk could seduce his bully buddy nan president to reconsider? Musk dodged nan particulars of his narration pinch Trump and nan taxation break by waxing philosophical astir EVs:

Sustainable bearer is inevitable. I’m highly assured that each bearer will beryllium autonomous [and] electric, including aircraft. And that it simply can’t beryllium stopped immoderate overmuch than 1 could personification stopped nan advent of nan psyche combustion engine.

That’s astir arsenic adjacent arsenic Musk came to assuring investors that Tesla’s automotive business was successful bully hands. Don’t liking astir losing those taxation breaks. Don’t liking astir nan Model 2 (now apparently called nan “Model Q,” I guess)! All of this is inevitable! It’s a very unit majeure style of argument. And Tesla’s banal worth surely backs it up. The company’s banal dipped correct earlier nan 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 connected pinch it. People pinch Teslas successful their driveway mightiness consciousness differently.