Tesla’s stock soared nearly 12% in pre-market trading on Thursday, following CEO Elon Musk’s forecast of robust electric vehicle (EV) sales growth. This reassurance comes after concerns that Musk’s focus had shifted to new ventures like robotaxis, leading to a dip in the company’s value. Investors were calmed by Musk’s renewed emphasis on expanding Tesla’s core business of selling EVs.
The stock surge added an estimated $80 billion to Tesla’s market capitalization, recovering recent losses that had worried shareholders. Some feared Musk’s attention was drawn to new projects, such as the recently announced robotaxi and AI initiatives, which left questions about Tesla’s primary focus.
Musk’s Vision For Tesla’s EV Future
In the previous quarter, Musk’s announcements centered on futuristic technologies—from driverless taxis to humanoid robots—raising concerns among investors about the future of Tesla’s vehicle business. Slumping margins due to price cuts also compounded investor worries. However, during Wednesday’s post-earnings call, Musk provided clarity. He projected 20-30% sales growth for next year and emphasized cost-cutting efforts that have bolstered profit margins. He also promised an affordable Tesla vehicle in the near future.
Jessica Caldwell, head of insights at Edmunds, commented on Musk’s approach: “He definitely seemed more passionate and invested this time. Investors needed to hear more concrete plans, and this call delivered that better than previous ones.”
Balancing Robotaxis And Core Business
Earlier this month, Tesla held an event to introduce its upcoming two-seater robotaxi, dubbed the Cybercab, which is expected to hit the market by 2026 at a price under $30,000. The event also showcased other innovative products like a 20-seater autonomous van and dancing humanoid robots. However, the lack of clarity on production timelines and regulatory hurdles led to a drop in Tesla’s stock price.
In Wednesday’s call, Musk reiterated his commitment to the Cybercab, aiming to produce 2 million units annually. Yet, some investors remain skeptical. Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management, expressed frustration, saying, “The days were good when Elon slept at the factory. He was focused. Now, it seems like he’s spreading himself too thin.”
Challenges Ahead for Tesla’s AI And Robotaxi Ambitions
Despite the enthusiasm, Tesla’s plans for driverless ride-hailing services face significant regulatory challenges. Musk acknowledged the hurdles, particularly in California, stating, “It’s not something we totally control, but I would be shocked if we don’t get approval next year.”
For now, Tesla’s strong EV fundamentals and the continued demand for electric vehicles appear to keep Musk in investors’ good graces. However, as Caldwell pointed out, “Capturing sales in today’s challenging market and streamlining operations aren’t as flashy as self-driving cabs, but they’re crucial for funding Tesla’s long-term ambitions.”
Tesla’s stock is currently trading at a premium, with a forward earnings multiple of 72.75, compared to Ford’s 5.94 and Microsoft’s 30.79, reflecting investors’ high expectations for its future growth.
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