If electric vehicle giant and fledgling humanoid robotics company Tesla Inc (NASDAQ:TSLA) was hoping to resuscitate its flailing share price ahead of tomorrow’s third-quarter earnings call, its recent robotaxi unveiling seems to have missed the mark.
Jefferies analysts believe Tesla’s much-hyped ‘We, Robot’ event, during which a beaming Elon Musk earlier this month unveiled a smorgasbord of flashy new prototypes, “mostly fell flat”.
Given the 7% fall in Tesla’s share price immediately following the event, many investors seemed to agree.
Tesla’s valuation is now 12% lower than what it was at the start of the year, in stark contrast to the rest of the ‘Magnificent Seven’ cohort that has delivered outstanding year-to-date returns.
Chief among these prototypes was the fully self-driving, steering wheel-less, foot brake-less, two-seater Tesla ‘Cybercab’.
While technologically and aesthetically captivating, Jefferies voiced concerns over the lack of fundamental business details.
Analysts said: “Robotaxi business models are multiple, with very different potential outcomes in terms of revenue and capital intensity.
“None of these were addressed, leaving us concerned about governance and mid-term funding.”
There was also a posse of ‘Optimus’ automatons present at the event, which showed an impressive ability to interact with attendees (though as it turns out, they were voiced and largely controlled by back-stage humans, making them closer to an avatar than a robot).
Then came the 20-seater Tesla ‘Robovan’, which appeared to take direct inspiration from 2004 Will Smith blockbuster I, Robot. So much so, that the film’s producer asked Musk for his designs back (later confirmed as a joke by Proyas).
Hey Elon, Can I have my designs back please? #ElonMusk #Elon_Musk pic.twitter.com/WPgxHevr6E
— Alex Proyas (@alex_proyas) October 13, 2024
These flashy announcements, however, served as a distraction from the very tangible issues underpinning Tesla’s finances.
Jefferies analysts stated: “With no tangible progress on technology beyond partly staged auto/robot demos, an improbable income-generating robotaxi… and no new model, Tesla not even (tried) to address the current growth hiatus.”
No longer capacity constrained, Tesla “is facing two years of subdued growth as core models age and scaling variable and fixed costs is challenging”.
In a potential swipe at controversial and outspoken figurehead Musk, Jefferies added that “governance remains a significant risk”.
Then there are the more existential issues facing the EV industry as a whole, namely a drop in demand for zero-carbon vehicles and encroaching low-cost alternatives from China.
Tesla has been strongarmed into reducing prices in China to tackle this issue, which is expected to underscore an earnings-per-share hit in the third quarter.
Despite these apparent risks, Jefferies did raise its share price target by 12% to account for the fact that Tesla is still the industry leader in electric vehicles.
Though at $195 per share, Jefferies’ target is below the industry consensus of around $210.