Tesla (NASDAQ: TSLA) recently reported its results for the first quarter, showcasing a gloomy downturn in electric vehicle (EV) sales. Total deliveries plummeted by 9%, while automotive revenue took a 13% hit, amounting to $17.4 billion, and overall revenue spiraled down by 9% to $21.3 billion. Amidst all this, earnings per share nosedived by 47%, landing at $0.45, coupled with cash outflows amounting to a staggering $2.5 billion.
Despite the lackluster numbers, Tesla’s stock exhibited an inexplicable surge of 12% following the results.
Tesla Embracing AI and Robotics
On Tesla’s first-quarter earnings call, CEO Elon Musk pivoted the narrative on the company’s future by stating that Tesla should be identified as an artificial intelligence (AI) or robotics entity, disregarding the conventional view of it being merely an auto manufacturer. He emphasized the pivotal role of Tesla’s AI-based self-driving technology, termed FSD V12, which has been activated in around 1.8 million vehicles traversing the roads, with approximately half of their users utilizing this feature.
Musk laid out ambitious plans for Tesla in the realm of autonomous driving, envisioning a vast fleet of robotaxis or cybercabs. Tesla disclosed plans to employ a “revolutionary ‘unboxed’ manufacturing strategy” for these robotaxis to slash production costs significantly. The grand reveal of Tesla’s robotaxi strategy is slated for August.
Musk’s ingenious idea involves utilizing the computing power embedded in Tesla vehicles when they are not in operation, enabling them to run AI models optimally. With a futuristic vision in mind, Musk projected the potential utilization of a fleet of 100 million Tesla vehicles globally for this purpose, likening it to Amazon’s unforeseen success with AWS, quite analogous to when Amazon was synonymous with book sales.
However, Musk’s comprehensive plan does raise substantive queries concerning vehicle ownership post-sale, the energy-intensive nature of AI computing, and the financial implications of energy consumption. A potential solution could be Tesla’s ownership of a robotaxi fleet, thereby taking responsibility for energy usage. Nonetheless, the viability of this concept in urban settings, where electricity prices may not be favorable, remains uncertain.
Another bold venture is Tesla’s humanoid robot named Optimus. Musk anticipates these robots performing practical tasks within Tesla’s factories by year-end, with plans to potentially introduce them to external markets by the close of 2025. Musk even hinted that Optimus could eventually surpass all other Tesla endeavors in value.
Image source: Getty Images.
Musk’s Visionary Outlook
Elon Musk’s foresight rings true – perceiving Tesla solely as an auto company might not warrant promising investments. Presently trading over 55 times forward earnings and 5 times sales, Tesla commands substantially higher valuations compared to traditional automakers like Ford and General Motors. Moreover, emerging EV companies have grappled with profitability issues.
However, should Tesla successfully transition into an AI robotics company, the prospects appear limitless. Investing in Tesla is essentially an endorsement of Elon Musk’s transformative vision, where EVs represent merely a fraction of the equation. While not all of Musk’s ambitious ideas may transpire, a realization of most could propel Tesla’s stock to a prosperous future.
With Tesla’s stock retracting by over 40% from recent peaks, this juncture might present an opportune moment to explore investments in Tesla and embrace Musk’s AI robotic vision.
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