Tesla (TSLA) tantalized investors Tuesday morning with an announcement of a new iteration of its Full Self-Driving (FSD) supervised technology. However, Wall Street appears to be cautiously optimistic, potentially anticipating a more substantial announcement.
The reveal followed a weekend of cryptic online teasers from Elon Musk’s company. A short clip featuring a spinning, Tesla-emblazoned component sparked widespread speculation about its purpose, fueling anticipation for the October 7th (Tuesday’s) reveal date.
Adding to the intrigue, a subsequent teaser showcased the obscured outline of a vehicle’s headlights. The build-up fueled a 5% surge in Tesla’s stock price on Monday, as social media buzzed with theories.
Analysts suggest the unveiling could range from the unveiling of a much-anticipated, lower-cost vehicle, to the next-generation Roadster, a project that has been on Musk’s roadmap for years.
The market is keenly awaiting a new model, marking the first since the late 2023 release of the Cybertruck, an angular, stainless steel pickup that has generated both excitement and controversy.
The Cybertruck, initially unveiled in 2019 amidst a memorable, albeit flawed, demo, has not achieved the widespread appeal of Tesla’s Model 3 sedan or Model Y SUVs. Furthermore, it has been subject to multiple recalls, underscoring the challenges in scaling production of such a novel vehicle.
As Tesla navigates a period of relatively slower auto sales growth, company executives are working diligently to pivot investor focus toward the long-term vision of Tesla evolving into a leader in robotics and autonomous driving technologies. This strategic shift aims to redefine Tesla’s narrative beyond mere vehicle production, highlighting the potential for recurring revenue streams from software and AI-driven services.
The recent sales trends can partly be attributed to a complex interplay of factors, including increased scrutiny of Musk’s public stances and pronouncements, which have sparked debates and potentially alienated some consumers. Furthermore, Tesla faces growing competition from established automotive giants like Volkswagen and emerging electric vehicle leaders like BYD. These companies are rapidly expanding their electric vehicle portfolios, offering compelling alternatives to Tesla’s aging model lineup.
Last October, Tesla offered a glimpse into its autonomous future with the “We, Robot” event, showcasing the Cybercab concept, a two-seater vehicle envisioned for ride-hailing services. The Cybercab, lacking a steering wheel or pedals, underscores Tesla’s ambition to create a fully autonomous transportation solution. At the event, Musk targeted a $30,000 price point for the vehicle.
However, during the company’s second-quarter earnings call, Tesla indicated that the Cybercab was not yet in production, leaving analysts questioning the timeline for its potential launch. The challenge of developing a cost-effective and fully autonomous vehicle at scale remains a significant hurdle.
Tesla’s past promises also loom large. At a 2017 event, a next-generation Roadster electric sports car was announced, but it has yet to materialize in the market. Musk has alluded to advanced capabilities, including the potential for the Roadster to possess flight capabilities, developed in collaboration with SpaceX. This ambition highlights the company’s continued pursuit of technological boundaries.
Moreover, Musk has repeatedly projected the potential for existing Tesla vehicles to transform into robotaxis through software updates. However, the reality of achieving Level 5 autonomy, where vehicles can operate without human intervention in all conditions, faces ongoing technical and regulatory challenges.
Currently, Tesla’s Robotaxi program employs human safety drivers in its test vehicles. This contrasts with competitors such as Alphabet’s Waymo and Baidu’s Apollo Go, which are actively testing vehicles without human drivers in select geographic areas.
In the field of humanoid robotics, Tesla is developing Optimus, a general-purpose robot intended for various tasks, including factory work and childcare. While the commercial availability of Optimus remains uncertain, companies like Agility Robotics and Unitree are already offering bipedal robots for sale, signaling a rapidly evolving robotics landscape.
After a challenging first quarter, Tesla’s stock demonstrated resilience, rebounding by 40% in the third quarter. The stock is currently up 12% year-to-date, supported in part by Musk’s personal investment of approximately $1 billion in Tesla stock during mid-September, demonstrating his ongoing confidence in the company’s long-term prospects.
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