Maybe that's the driver. I always figured keeping Musk on was a sort of suicide pact, without Musk the company might be more traditionally valued, but that means the stock would tank. So they have to stick with him.
Staying in autos, eventually folks figure out the math and the stock tanks ... so they have to keep moving and keeping that sort of aspirational stock price.
BYD is slapping the EV industry around like a gorilla, Tesla simply cannot compete in any meaningful way. Waymo has achieved profit per unit and people are happy to see driver-less taxis in their city and pay for the service.
Tesla also cannot justify valuations based on automotive sales/subscriptions alone - they were always going to have to pivot.
They're in a tight spot and they need to do something drastic.
I was in the market for an EV due to great tax advantages. I assumed BYD would be the sweet spot, but test drove a Tesla for comparison.
I ended up with the Tesla. It is hands down the better vehicle and I'd be very surprised if anybody seriously thought otherwise. There wasn't very much in it price wise so that wasn't a factor.
The BYD (Sealion 7) wasn't even a bad car. It's a good car. But it's inspired and just a little gaudy. It felt like a conventional SUV with an EV powertrain. The Tesla felt like the future.
I was very close to going short on Tesla yesterday. Very glad I didn't in the end. The fundamentals of the company are absolute trash, yet the stock price is through the roof year after year. One day the crash will be epic.
Tesla also announced they will be discontinuing the basic lane keep + adaptive speed cruise control they helped pioneer in cars sold going forward. But this is now a standard (free) feature even in basic vehicles like the Toyota Corolla. Why would they intentionally cripple their vehicles to the point hat they would be inferior to most cars today?
Then I learned that Musk's incentive pay has a 10 million full self-driving subscription hurdle, and it all made sense.
They had the first mover advantage, but then Musk lost interest in the company and let it just sit there for the last five years or so without making sure that they have a future-proof product pipeline and that those products are actually being delivered on a reasonable schedule. Now they are increasingly turning into an EV also-ran while their moonshots are unlikely to work out any time soon.
Realistically, he should have put someone else in charge after the launch of the Model 3 to develop the company further, but I don't think his ego allows it.
I have to admit, I love my model S and have been very bullish of TSLA but this news makes me very bearish. There is no way they are going to make robots at scale in the next 5 years and the model s and model X are cool pieces of technology. If they dont start rolling out robotaxi extremely quickly to new locations, I cant imagine the stock going anywhere but down.
The author said he saw Tesla prove that EVs were profitable, but it was profitable when taxpayers gave it $7,500 per vehicle sold... That's the whole profit margin on higher-end cars, and more profit than most mass-market makers get. EVs were never profitable.
I heard Tesla's "Full Self Drive" is now ready. The only thing missing is "self" and "full" but that's just a small detail. Moving on to fully autonomous robots now.
It's business as usual for Elon. This is his main strategy. He always goes all in on risky technology that people say won't work. People said it about EVs. They said it about reusing first stages. They said it about Starlink's phased array antennas.
Now he's going all in on self driving. It's obvious that self driving turns personal transportation into a service business. So that's where he's going. Yeah, if you don't believe in self driving then it's suicide. But if you do, it's the only thing that makes sense.
Elon's superpower is commanding insane valuation premiums. The trouble with this is that "the bill eventually comes due", so to speak, which forces Elon's companies to take wilder and wilder bets, or to make wilder and wilder promises.
With telsa it was robotaxis, and when that failed to materialize, humanoid robots (fucking LOL).
SpaceX is an even more insane example. They are eyeing an IPO at a 1.5 trillion valuation. And yet the market for satellite launches is simply not that big. (What would you do with a satellite, if I gifted you one for free?). Estimates have SpaceX doing about $3B in annual earnings, which would give them a 500x earnings multiple at a 1.5T valuation (Apple: 35).
And so SpaceX/Elon had to invent the absolutely idiotic idea of "data centers in space" to sell some future vision of tens of thousands of launches per year.
He keeps upping the ante (and the ridiculousness of the vision), and so far investors keep funding it.
Me? I've realized that this madness is entirely "opt-in" and I choose to simply...not opt-in.
Strongly disagree with this opinion piece. I think Musk/Tesla figured out it is impossible to compete with Chinese manufacturers in the foreseeable future so they are pivoting.
This "Elon Musk lost interest" is very, very naive take.
Actually I think this new directions demonstrates how great decision making they have at Tesla. Today and even more in the future they have no way of competing with the Chinese manufacturers. It is simply physically not possible.
So they are rightfully pivoting and moving away from the race to the bottom that is ensuing.
I'm not saying the pundits are wrong, but tons of people said Tesla would never amount to anything back when they were just shipping the Roadster and the Model S.
I think we're at the point where there is a bit of healthy competition in the EV space (even when excluding the Chinese), that Teslas are mostly just symbolic.
People still buy Teslas. But in my circle, most have bought other EVs (and not just because of Elon). Teslas are no longer the obvious superior choice.
Give me a break. Tesla has 4 different, 4 person cars. It's redundant. In manufacturing and business, reducing variability is everything. Engineering and supply chain has now been freed from two entire SKUs. That's massive. In a self driving world, they don't really the Model 3 either. The best part is no part - well getting rid of two entire vehicles worth of parts that contributed very little to the bottom line is massive.
It's amazing after 20 years of the same MO, people still don't understand how Tesla/SpaceX operate and succeed. It's like deleting millions of lines of code from a code base. It improves not just performance of the organization, but maintenance as well. The S/X were outsized tech debt on every facet of the business and now they're gone. 100% the right move and very few people understand it.
I'm surprised that I feel like this is the right move for them. Competing on the cars seems like a bad idea now that EVs are kind of a commodity market.
Their revenue is flat for last 4 years. They have established their status outside top 10 manufacturers and losing EV market share to Chinese and Europeans.
Car revenue: -11%
operating margin: 3.86%
Free cash flow -30%
Tesla PE > 280 is magic. Now they are "pivoting" to Cybercab, humanoid robots and investing billions into xAI. Jumping from hype-trend to next without any problem is impressive. Fair valuation always in the future.
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[ 4.0 ms ] story [ 80.7 ms ] thread- Waymo is generating less than 150m in 2025.
- Consumer robotics is an absolute unknown.
How can the transition be rationally justified? Let alone the valuation.
Maybe that's the driver. I always figured keeping Musk on was a sort of suicide pact, without Musk the company might be more traditionally valued, but that means the stock would tank. So they have to stick with him.
Staying in autos, eventually folks figure out the math and the stock tanks ... so they have to keep moving and keeping that sort of aspirational stock price.
Tesla also cannot justify valuations based on automotive sales/subscriptions alone - they were always going to have to pivot.
They're in a tight spot and they need to do something drastic.
I ended up with the Tesla. It is hands down the better vehicle and I'd be very surprised if anybody seriously thought otherwise. There wasn't very much in it price wise so that wasn't a factor.
The BYD (Sealion 7) wasn't even a bad car. It's a good car. But it's inspired and just a little gaudy. It felt like a conventional SUV with an EV powertrain. The Tesla felt like the future.
Then I learned that Musk's incentive pay has a 10 million full self-driving subscription hurdle, and it all made sense.
Realistically, he should have put someone else in charge after the launch of the Model 3 to develop the company further, but I don't think his ego allows it.
Now he's going all in on self driving. It's obvious that self driving turns personal transportation into a service business. So that's where he's going. Yeah, if you don't believe in self driving then it's suicide. But if you do, it's the only thing that makes sense.
"If you don't cannibalize yourself, someone else will." -Steve Jobs
With telsa it was robotaxis, and when that failed to materialize, humanoid robots (fucking LOL).
SpaceX is an even more insane example. They are eyeing an IPO at a 1.5 trillion valuation. And yet the market for satellite launches is simply not that big. (What would you do with a satellite, if I gifted you one for free?). Estimates have SpaceX doing about $3B in annual earnings, which would give them a 500x earnings multiple at a 1.5T valuation (Apple: 35).
And so SpaceX/Elon had to invent the absolutely idiotic idea of "data centers in space" to sell some future vision of tens of thousands of launches per year.
He keeps upping the ante (and the ridiculousness of the vision), and so far investors keep funding it.
Me? I've realized that this madness is entirely "opt-in" and I choose to simply...not opt-in.
They won’t make 25k cars either. Very little margin on that.
Pivoting to consumer robots? Isn’t that cool?
Actually I think this new directions demonstrates how great decision making they have at Tesla. Today and even more in the future they have no way of competing with the Chinese manufacturers. It is simply physically not possible.
So they are rightfully pivoting and moving away from the race to the bottom that is ensuing.
People still buy Teslas. But in my circle, most have bought other EVs (and not just because of Elon). Teslas are no longer the obvious superior choice.
It's amazing after 20 years of the same MO, people still don't understand how Tesla/SpaceX operate and succeed. It's like deleting millions of lines of code from a code base. It improves not just performance of the organization, but maintenance as well. The S/X were outsized tech debt on every facet of the business and now they're gone. 100% the right move and very few people understand it.