Investor's Corner
“We Need To Be Evangelists,” Tesla Tells FTC
Tesla general counsel Todd Maron told the FTC this week that traditional auto dealers have a basic conflict of interest with selling electric cars.
At the Federal Trade Commission panel discussion on Wednesday, Tesla general counsel Todd Maron made this opening statement:
“Any discussion of why Tesla sells directly comes back to our mission. Our mission is quite specific. It is to accelerate the world’s transition to sustainable transportation. You can say we’re true believers and it wouldn’t be an unfair characterization. That’s our mission because we fervently believe that transitioning to electric vehicles is critical to the health of our planet and simply because we believe that electric vehicles are superior vehicles to their gas-powered counterparts. They’re higher-performing, they’re more efficient and they’re safer than gas-powered cars.”
The FTC has indicated it favors direct sales, despite determined opposition from franchise dealers in several states. Maron used the panel discussion to expand on why Tesla does not think dealers are the best way to get the message about electric cars out to potential customers. It takes a lot of effort to explain new technology to people, he said. Dealers are interested in moving as many cars as possible in the shortest possible time.
Usually, most of the discussion that takes place between a dealer and customer revolves around price, not educating the consumer. You can’t expect a dealer to do your evangelizing for you, Maron said. Tesla doesn’t want or need sprawling sales lots brimming with hundreds of cars. Tesla builds each car for a specific customer. It doesn’t stockpile inventory the way traditional dealers do. It also doesn’t play pricing games with its customers. Maron thinks most dealers would have no idea how to do business the Tesla way.
With margins on new cars razor thin, most dealers are focused on making money from repairs and service. “We can’t offer that to any franchised dealer, because we only profit in one way: new car sales and new car sales alone. We can’t make money from service, because our cars have far less parts than gas-powered cars. There are no regular service visits for engine tune-ups and oil changes. We don’t have an engine. We don’t have oil.”
Maron indicated dealers have a basic conflict of interest with the Tesla mission, according to Autoblog. Tesla believes that gas-powered vehicles should “be replaced entirely” by electric vehicles. “Even if you wanted to outsource the responsibility of communicating this message, it would be impossible for traditional dealers to convey this adequately,” he said. “This isn’t a knock on them. Dealers are not fundamentally convinced of the mission of EVs as we are. They make 99 percent of their revenue off gas-powered cars.”
Maron is not the only one who thinks traditional dealers are road blocks on the pathway to electric cars. The Institute of Transportation Studies at UC Davis also claims most dealers don’t want to be bothered with selling EVs. People who go to a dealer to buy an electric car report that sales representatives are poorly trained and often try to switch them to conventional cars rather than take the time to educate them about the advantages of electric cars.
At the hearing in Washington, FTC chair Edith Ramirez said that, “The automobile marketplace may be on the precipice of dramatic change.” Was that a hint that regulators may be considering new rules that would permit direct sales of motor vehicles to consumers? So far, the FTC has tried to stay above the fray, but there was a sense at these hearings that changes are coming and may be imminent.
Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.
The price beats the previous record close, which was $479.86.
Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.
This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.
Shares closed up $14.57 today, up over 3 percent.
The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.
However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.
Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.
Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.
Elon Musk
Tesla needs to come through on this one Robotaxi metric, analyst says
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.
Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.
However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.
The analyst said:
“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”
Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.
There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.
This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.
Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.
Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.
Investor's Corner
Tesla gets bold Robotaxi prediction from Wall Street firm
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.
Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.
Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.
Tesla expands Robotaxi app access once again, this time on a global scale
By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.
He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:
- Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
- Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
- Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.
Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.
Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.
So far, the program, which is active in Austin and the California Bay Area, has been widely successful.
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