Tesla’s announcement of a June launch for its paid autonomous ride-hailing service in Austin has been hailed as a bullish development by investor Gary Black. However, Black also expressed concerns about the company’s automotive margins and the design of its upcoming affordable electric vehicle.
Key Takeaways
- Tesla’s planned June launch of paid autonomous ride-hailing in Austin is seen as a significant development
- The company’s low automotive gross margins of 13.6% excluding regulatory credits have raised concerns
- The design of the upcoming lower-priced vehicle is a crucial factor in determining its success
Analysis
Gary Black, managing partner of The Future Fund LLC, highlighted the importance of the new affordable vehicle’s form factor, warning that simply scaling down existing models could cannibalize current sales. “Much depends on whether the new $30,000-$35,000 Tesla vehicle extends Tesla’s TAM to the compact category, which represents 15% of global volume,” he noted.
Earnings Report
Tesla reported fourth-quarter revenue of $25.71 billion, missing analyst estimates of $27.26 billion. Automotive revenue declined 8% year-over-year to $19.8 billion, though the company achieved its lowest-ever cost of goods sold per vehicle at under $35,000.
Future Plans
The automaker confirmed its plans for new vehicle production starting in the first half of 2025, though it cautioned that manufacturing on existing production lines would limit cost reduction potential. Tesla also announced plans for volume production of its Cybercab robotaxi beginning in 2026.
Market Reaction
Tesla stock is trading 4.15% higher in the after-hours session at $405.25, with a 52-week trading range of $138.80 to $488.54. Shares lost 2.3% to $389.10 in Wednesday’s regular session.
Conclusion
Tesla’s June robotaxi launch is a significant development, but the company’s automotive margins and the design of its upcoming affordable electric vehicle are crucial factors that will determine its success. As the company navigates increased scrutiny following its first annual delivery decline in 2024, investors will be watching closely to see how these developments unfold.