There’s lots you possibly can say about Elon Musk. That he has an impressive poker face just isn’t one among them.
Astute Elon-ologists, and those that know him, can inform when he is bored. And doubtless the entire world may hear that boredom yesterday on Tesla’s Q1 2024 earnings name, a dialogue with analysts that got here amid slumping gross sales and revenues, disappointments with the Cybertruck, mass layoffs, continued uncertainty round its so-called Full Self-Driving expertise and Musk’s personal controversial public antics.
Can Tesla sustain its lead?
Tesla nonetheless sells the vast majority of new EVs within the U.S., however rivals are catching up. And the corporate’s plans to focus extra closely on autonomous driving might not sq. with the realities on the bottom.
Traders wished to understand how Tesla plans to cope with intensifying electrical automobile competitors as its getting older lineup begins to really feel stale. That is not actually what they acquired.
“We have up to date our future automobile lineup to speed up the launch of latest fashions forward [of the] beforehand talked about begin of manufacturing within the second half of 2025,” Musk stated, studying off a script he solely sometimes veered from. “So, we anticipate it to be extra like early 2025, if not late this yr.”
He added that these “new automobiles,” together with a long-awaited extra inexpensive Tesla, will use “features of the next-generation platform” in addition to the present one, so no new manufacturing unit or manufacturing traces are wanted.
That was excellent news for buyers, who loathed the concept that the extra inexpensive EV may need been canceled. However past these pithy statements, we did not get a lot else. And Musk clearly wasn’t occupied with elaborating.
Little was stated about any new Teslas coming to market quickly, in addition to maybe the Mannequin 3 Efficiency unveiled earlier that day. There wasn’t even a lot speak of EVs or batteries normally; when requested concerning the ramp-up of the brand new 4680 battery cells, Musk even stated they are not “tremendous vital, for not less than within the close to time period.”
At one level on the decision, AllianceBernstein analyst Toni Sacconaghi requested a great query about whether or not these new fashions had been tweaks to current ones, just like the Mannequin 3 Highland, or solely new ones.
He was shut down in fast order. “I believe we have stated all we’ll on that entrance,” Musk stated. “So, what’s your follow-up?”
That alternate spoke volumes. It is by no means been extra readily obvious that Tesla is a automobile firm run by a CEO who’s tired of automobiles.
It was painfully apparent from the decision what Musk just isn’t tired of: questions of autonomy, synthetic intelligence, utilizing the phrase “compute” as a noun, robotaxis, networked self-driving automobiles and humanoid robots like Optimus—which will probably be “extra helpful than every thing else mixed” and in Tesla factories “doing helpful duties earlier than the tip of this yr.” (Every time Musk says “this yr” or “subsequent yr,” it actually means “someday sooner or later, perhaps.”) He imagines a future the place the automobiles bought are extra like a fusion of Uber and Airbnb, deployable autonomously to generate profits for his or her homeowners—with Tesla presumably getting its minimize as nicely.
However promoting automobiles—and to a lesser diploma, income from software program and charging—will fund Musk’s goals for totally automated driving. And proper now, that is the place Tesla is beginning to lose in a giant means.
“Elon spent loads of time delving into what autonomy can imply for not solely Tesla, however form of how our transportation system will work,” Corey Cantor, a BloombergNEF analyst, instructed me after the decision. The issue, Cantor stated, is that Tesla is down on EV market share. It fell from about 80% on the finish of 2021 to round 50% by the tip of final yr.
Joined by his executives who additionally mulled the way forward for autonomous driving, yesterday’s affair felt extra like a TED Discuss than a transparent enterprise technique that lays out a roadmap for the longer term. It is by no means been extra clear that sure, Musk is certainly betting the farm on autonomy and robotic taxis, not consumer-owned passenger automobiles.
“I believe loads of this felt like, ‘we’re gonna announce targets and targets and not using a strategy to get there’,” Cantor stated. “You probably have no roadmap transferring ahead, you start to see the place a Hyundai, Kia or perhaps a [General Motors] or BMW can start to take a whack at Tesla’s market share.”
And with out market share, or having the ability to broaden previous its current lineup, it feels laborious to think about how Tesla can bridge the hole between the place it’s now and this Airbnb-Uber-robotaxi future that Musk says will upend all the automobile enterprise. There’s a actuality on the market within the multiverse the place Tesla may’ve introduced three new crossovers and two new sedans to exchange the Mannequin S, X, 3 and Y, and all the massive plans for autonomy as nicely. However that is not the actuality we reside in, and clearly Musk’s coronary heart is not on this quite important aspect of the enterprise anymore.
However in specializing in this robotaxi future, he runs the danger of neglecting the basics that might underwrite the bridge to that future.
Granted, it isn’t surprising that the man who says he desires to make humanity right into a spacefaring race is disinterested in issues as trivial as duking it out with, say, Volkswagen or Hyundai over market EV share. And you may palpably sense Musk’s ire at feeling neglected of the AI dialog dominating a lot of tech proper now; his ongoing feud with Sam Altman and OpenAI is now a matter of public report. Musk desires Tesla in on that, as a result of greater than ever, it is key to the corporate’s sky-high valuation.
“For those who worth Tesla as identical to an auto firm, basically, it is simply the unsuitable framework and for those who ask the unsuitable query, then the proper reply is unimaginable,” he stated. “If anyone does not imagine Tesla goes to resolve autonomy, I believe they shouldn’t be an investor within the firm.” He added that if somebody has not tried FSD model 12, “then you definitely actually do not perceive what is going on on.”
None of what Musk needed to say on yesterday’s name is new; for a few years, auto trade executives have spoken vaguely of a far-off future the place no person owns automobiles anymore, and as a substitute, kind of subscribe to them whereas making use of their automated options. Recurring income, identical to the way you “personal” little or no of your digital music or films or video video games anymore. (And it is stuff that Musk has definitely stated earlier than as nicely.) Besides now he is speaking about really doing it, and really, very quickly.
I requested Alex Roy, a longtime Tesla proprietor, former Argo AI govt, Johnson & Roy co-founder, frequent operator of Autopilot (and, within the curiosity of full disclosure, each a longtime skilled colleague and a buddy) what he considered that—the concept that FSD 12, which he has been utilizing, would lay the groundwork for this autonomous future.
“No,” Roy stated with amusing. “It is in all probability the perfect driver help performance that exists proper now. However this doesn’t essentially imply that they will, or are assured to, flip what I’ve pushed with my Tesla into a completely practical robotaxi anytime quickly.”
Take Google’s Waymo for instance, Roy stated. It operates in 4 cities with extra coming quickly. It may possibly do airport pickups in a type of cities solely, for now. “Waymo has been working for 10 years, and it may possibly solely do this just some months in the past,” Roy stated. And Waymo is, proper now, one of many final corporations standing after a brutal few years for the autonomy sector that noticed the demise of Argo AI and scores of high-profile incidents for GM’s Cruise division.
However we have now by no means seen a Tesla able to such issues. To not point out the numerous authorized, regulatory and insurance coverage questions no person has solved round totally autonomous automobiles within the U.S. but—to say nothing of even more durable regulatory markets like Europe and China.
“[Musk] has chosen the toughest attainable downside and given himself no shortcuts to get there,” Roy stated.
I nonetheless assume it is unwise to wager utterly in opposition to Tesla. For higher or worse, it has written the playbook all the auto trade is now following, from over-the-air software program updates to constructing fast-charging networks themselves to new manufacturing methods. All of for this reason buyers have any religion in Musk in any respect anymore.
The issue is that now, he appears dead-set on taking part in a wholly completely different sport, at a time when the market is clearly simply demanding extra inexpensive EV choices. And successful that sport hinges on a expertise that is been the supply of too many lawsuits, high-profile mishaps and investigations to rely. May developments in FSD soar begin a brand new autonomy arms race for the 2020s that each different automaker and startup will try and comply with? Perhaps. However that is lots to wager on.
Musk might not need Tesla to be a automobile firm, however it’s, and making and promoting automobiles often is the solely means Tesla goes to make it lengthy sufficient to out-Waymo Waymo one way or the other. No less than after yesterday’s name, the trail to that day feels no clearer than it did that morning. All of it feels additional afield of Tesla’s unique said mission than ever earlier than.
Then once more, Tesla’s inventory went up 12% in premarket buying and selling Wednesday, so one thing should have labored.
Contact the writer: [email protected]
Correction: An earlier model of this story misspelled Toni Sacconaghi’s first title. We remorse the error.