Gary Black, Managing Director of Future Fund LLC, has expressed skepticism over Tesla’s shift towards autonomy and humanoid robots. Black believes that this move is a “fool’s narrative” given that over 70% of Tesla’s profits come from electric vehicles (EVs). He highlighted the decline in Tesla’s global volumes and questioned the justification for the company’s high valuation.
Black’s Critique of Tesla Bulls
Black criticized Tesla bulls for ignoring the rise of autonomous ride-sharing in China, where Tesla lags behind local manufacturers. He also pointed out that the company’s focus on unsupervised autonomy and humanoid robots is a departure from its core EV business. Black stated that it’s difficult to justify Tesla’s forward P/E of 200x+ in a commodity business where the company is one of many fighting for market share.
Valuation Concerns
Needham analyst Chris Pierce echoed Black’s concerns, warning that half of Tesla’s projected 2030-2035 gross profit depends on unproven businesses like ridesharing and robotics. This leaves “limited valuation support” at current levels. Ross Gerber, co-founder of Gerber Kawasaki, cautioned that shifting Tesla’s focus away from its core EV business would be a “strategic error” for the company.
Declining Sales in China and Europe
Tesla’s sales have been declining in China and Europe, with the company’s China sales plunging to 26,006 units in October, a 35.8% drop from a year earlier. The company’s market share in China also tumbled to 3.2%, down from 8.7% in September. Meanwhile, Tesla registrations in nine key European countries reportedly declined 36.3% year-over-year in October.
Market Performance
Tesla’s stock has been underperforming, with the company’s shares falling 1.26% to close at $439.62 on Tuesday. On a year-to-date basis, Tesla Stock climbed 15.91%. The company’s mixed performance is reflected in Benzinga’s Edge Rankings, which place Tesla in the 77th percentile for quality and the 3rd percentile for value.
Conclusion
Gary Black’s critique of Tesla’s autonomy push and valuation concerns has sparked a debate about the company’s future prospects. With declining sales in China and Europe, and a shift in focus away from its core EV business, Tesla’s stock is under scrutiny. As the company navigates these challenges, investors will be watching closely to see how Tesla’s strategy evolves and how it impacts the company’s valuation.