Wedbush analyst Dan Ives has urged for significant changes at Tesla Inc. in response to the ongoing decline in the company’s share price. Ives, a long-time Tesla bull, believes that the future of the electric vehicle manufacturer is contingent on a significant shift in Elon Musk‘s approach.
What Happened
Ives suggests that Musk should formally reaffirm his commitment to Tesla and outline a clear plan for the launch of its new lower-cost vehicles and full-self-driving car. Musk’s political affiliations, particularly his involvement with certain groups, have sparked protests at Tesla facilities and tarnished the brand’s image. Ives cautions that without a change in direction, Tesla could face a “black swan event” that could further damage the brand.
Recommended Actions
Ives recommends two key steps that Musk needs to take to reclaim the erosion in Tesla’s brand value and position:
- Formal Commitment: Musk should formally confirm his commitment to Tesla before or during the company’s May quarterly update.
- Roadmap and Timeline: Musk must outline a roadmap and timeline for the 2025 launch of the new lower-cost vehicles, along with details about the full-self-driving car rollout in June.
Current Challenges
This call for change comes at a time when Tesla is grappling with other challenges, including a recent recall of over 46,000 Cybertruck vehicles in the United States due to a safety issue with an exterior panel. The recall was prompted by concerns that the cant rail, a stainless-steel exterior trim panel, could delaminate and detach from the vehicle while in motion.
Impact on Stock
Tesla stock dropped 1.57% in today’s pre-market trading session. On a year-to-date basis, it declined more than 57%. Top Investor, Ross Gerber, believes that Musk needs to step down as the CEO of Tesla as he has ‘destroyed’ his reputation.
Conclusion
The need for a significant course correction at Tesla is underscored by the ongoing stock freefall and public outcry over Musk’s political involvement. By taking the recommended actions, Musk can work to regain investor trust and shift the company’s direction towards a more positive future.