Investor's Corner
Tesla crushes short thesis on declining Model 3 demand
Tesla announced during its Q2 2018 earnings call that interest and demand for the Model 3 remains strong, particularly from customers who are not part of the company’s initial line of reservation holders. The update follows months of speculation that the rollout of the Model 3 has been anything but smooth. Since starting production of the electric car, Tesla has faced difficulty after difficulty, spurred by aggressive timelines announced by CEO Elon Musk and bottlenecks that emerged from its production lines. When the Model 3 was released, Elon Musk boldly declared that Tesla would aim to manufacture 5,000 of the vehicles per week by the end of 2017. That goal proved elusive until the end of Q2 2018, and only because Tesla adopted a “burst build” strategy.
While Tesla managed to hit its target of manufacturing 5,000 Model 3 per week at the end of Q2 2018, doubts from the company’s critics about the demand for the electric car emerged. As noted by Elon Musk during the recently held earnings call, Tesla actually sustained the Model 3’s 5,000/week production rate for multiple weeks in July. With the company producing more vehicles, Tesla began stockpiling more of the finished Model 3 in several lots such as the Burbank Airport while the cars waited for delivery.
Viewed by the company’s critics, the lots filled with vehicles were proof that demand for the Model 3 was declining, and that the cars indicated that customers were opting out of deliveries due to poor quality. Latrilife, a Tesla critic, even announced on Twitter that Tesla’s Burbank Airport lot is under 24/7 surveillance. Goldman Sachs analyst David Tamberrino also published a note recently stating that Model 3 demand appears to be waning based on social media activity around the electric car.
According to Tesla on its recently held earnings call, however, interest in the Model 3 is alive and well. While responding to a question from Toni Sacconaghi of Bernstein, Tesla worldwide head of sales Robin Ren stated the company now sees more orders for the AWD dual motor and Performance variants combined compared to the Long Range RWD Model 3. Perhaps even more importantly, Tesla has also been seeing interest in the Model 3 coming from individuals who are not part of the electric car’s list of reservation holders.
“Since we opened the configurator to the general public in early July, we have seen an increased demand coming from people who do not currently hold a reservation. This is something that we found super exciting. These are the people who have no idea about Model 3 and they heard about Model 3 is available to order. Many of them requested test drives.
“Since early July, we have over 60,000 test drive requests in the US alone. These people come into our stores, do the test drive, and they become super excited, and they decide to order the car. We believe the strong demand, especially from non-reservation holders, will continue as we increase production.”
Tesla also noted that Model 3 customers have been trading in vehicles that are not in the electric car’s segment. The Model 3 competes in the midsize luxury sedan market, but the Top 5 vehicles the electric car’s customers have been trading in are the Toyota Prius, BMW 3 Series, Honda Accord, Honda Civic, and the Nissan Leaf. These vehicles, save for the BMW 3 Series, are not luxury sedans at all. Instead, they belong to a more affordable segment in the mainstream auto market. This means that as Tesla produces more of the electric car, even customers who drive more affordable vehicles are considering the purchase of a Model 3, a car that is more expensive.
Part of this could be due, of course, due to Tesla’s promised $35,000 Standard Range RWD version of the Model 3, which is expected to start production in 6-9 months. At its entry-level price, the Model 3 has the potential to take a big chunk of the midsize sedan market, possibly even taking on mainstays such as the Toyota Camry. Even without its base model, however, the electric car is still a compelling purchase, considering that it is one of the only vehicles on the road that is set to get better over time, thanks to Tesla’s trademark over-the-air updates. And that, for some customers, is worth the extra investment.
Elon Musk
Tesla stock gets latest synopsis from Jim Cramer: ‘It’s actually a robotics company’
“Turns out it’s actually a robotics and Cybercab company, and I want to buy, buy, buy. Yes, Tesla’s the paper that turned into scissors in one session,” Cramer said.
Tesla stock (NASDAQ: TSLA) got its latest synopsis from Wall Street analyst Jim Cramer, who finally realized something that many fans of the company have known all along: it’s not a car company. Instead, it’s a robotics company.
In a recent note that was released after Tesla reported Earnings in late January, Cramer seemed to recognize that the underwhelming financials and overall performance of the automotive division were not representative of the current state of affairs.
Instead, we’re seeing a company transition itself away from its early identity, essentially evolving like a caterpillar into a butterfly.
The narrative of the Earnings Call was simple: We’re not a car company, at least not from a birds-eye view. We’re an AI and Robotics company, and we are transitioning to this quicker than most people realize.
Tesla stock gets another analysis from Jim Cramer, and investors will like it
Tesla’s Q4 Earnings Call featured plenty of analysis from CEO Elon Musk and others, and some of the more minor details of the call were even indicative of a company that is moving toward AI instead of its cars. For example, the Model S and Model X will be no more after Q2, as Musk said that they serve relatively no purpose for the future.
Instead, Tesla is shifting its focus to the vehicles catered for autonomy and its Robotaxi and self-driving efforts.
Cramer recognizes this:
“…we got results from Tesla, which actually beat numbers, but nobody cares about the numbers here, as electric vehicles are the past. And according to CEO Elon Musk, the future of this company comes down to Cybercabs and humanoid robots. Stock fell more than 3% the next day. That may be because their capital expenditures budget was higher than expected, or maybe people wanted more details from the new businesses. At this point, I think Musk acolytes might be more excited about SpaceX, which is planning to come public later this year.”
He continued, highlighting the company’s true transition away from vehicles to its Cybercab, Optimus, and AI ambitions:
“I know it’s hard to believe how quickly this market can change its attitude. Last night, I heard a disastrous car company speak. Turns out it’s actually a robotics and Cybercab company, and I want to buy, buy, buy. Yes, Tesla’s the paper that turned into scissors in one session. I didn’t like it as a car company. Boy, I love it as a Cybercab and humanoid robot juggernaut. Call me a buyer and give me five robots while I’m at it.”
Cramer’s narrative seems to fit that of the most bullish Tesla investors. Anyone who is labeled a “permabull” has been echoing a similar sentiment over the past several years: Tesla is not a car company any longer.
Instead, the true focus is on the future and the potential that AI and Robotics bring to the company. It is truly difficult to put Tesla shares in the same group as companies like Ford, General Motors, and others.
Tesla shares are down less than half a percent at the time of publishing, trading at $423.69.
There are a lot of Tesla bulls out there who have astronomical expectations for the company, especially as its arm of reach has gone well past automotive and energy and entered artificial intelligence and robotics.
However, some of the most bullish Tesla investors believe the company could become worth $100 trillion, and CEO Elon Musk does not believe that number is completely out of the question, even if it sounds almost ridiculous.
To put that number into perspective, the top ten most valuable companies in the world — NVIDIA, Apple, Alphabet, Microsoft, Amazon, TSMC, Meta, Saudi Aramco, Broadcom, and Tesla — are worth roughly $26 trillion.
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Cathie Wood of ARK Invest believes the number is reasonable considering Tesla’s long-reaching industry ambitions:
“…in the world of AI, what do you have to have to win? You have to have proprietary data, and think about all the proprietary data he has, different kinds of proprietary data. Tesla, the language of the road; Neuralink, multiomics data; nobody else has that data. X, nobody else has that data either. I could see $100 trillion. I think it’s going to happen because of convergence. I think Tesla is the leading candidate [for $100 trillion] for the reason I just said.”
Musk said late last year that all of his companies seem to be “heading toward convergence,” and it’s started to come to fruition. Tesla invested in xAI, as revealed in its Q4 Earnings Shareholder Deck, and SpaceX recently acquired xAI, marking the first step in the potential for a massive umbrella of companies under Musk’s watch.
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Now that it is happening, it seems Musk is even more enthusiastic about a massive valuation that would swell to nearly four-times the value of the top ten most valuable companies in the world currently, as he said on X, the idea of a $100 trillion valuation is “not impossible.”
It’s not impossible
— Elon Musk (@elonmusk) February 6, 2026
Tesla is not just a car company. With its many projects, including the launch of Robotaxi, the progress of the Optimus robot, and its AI ambitions, it has the potential to continue gaining value at an accelerating rate.
Musk’s comments show his confidence in Tesla’s numerous projects, especially as some begin to mature and some head toward their initial stages.
Elon Musk
Tesla director pay lawsuit sees lawyer fees slashed by $100 million
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
The Delaware Supreme Court has cut more than $100 million from a legal fee award tied to a shareholder lawsuit challenging compensation paid to Tesla directors between 2017 and 2020.
The ruling leaves the case’s underlying settlement intact while significantly reducing what the plaintiffs’ attorneys will receive.
Delaware Supreme Court trims legal fees
As noted in a Bloomberg Law report, the case targeted pay granted to Tesla directors, including CEO Elon Musk, Oracle founder Larry Ellison, Kimbal Musk, and Rupert Murdoch. The Delaware Chancery Court had awarded $176 million to the plaintiffs. Tesla’s board must also return stock options and forego years worth of pay.
As per Chief Justice Collins J. Seitz Jr. in an opinion for the Delaware Supreme Court’s full five-member panel, however, the decision of the Delaware Chancery Court to award $176 million to a pension fund’s law firm “erred by including in its financial benefit analysis the intrinsic value” of options being returned by Tesla’s board.
The justices then reduced the fee award from $176 million to $70.9 million. “As we measure it, $71 million reflects a reasonable fee for counsel’s efforts and does not result in a windfall,” Chief Justice Seitz wrote.
Other settlement terms still intact
The Supreme Court upheld the settlement itself, which requires Tesla’s board to return stock and options valued at up to $735 million and to forgo three years of additional compensation worth about $184 million.
Tesla argued during oral arguments that a fee award closer to $70 million would be appropriate. Interestingly enough, back in October, Justice Karen L. Valihura noted that the $176 award was $60 million more than the Delaware judiciary’s budget from the previous year. This was quite interesting as the case was “settled midstream.”
The lawsuit was brought by a pension fund on behalf of Tesla shareholders and focused exclusively on director pay during the 2017–2020 period. The case is separate from other high-profile compensation disputes involving Elon Musk.
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