Investor's Corner
Tesla CEO Elon Musk to meet with China government officials this week: report
Tesla CEO Elon Musk will be at an event in Shanghai on Tuesday, according to sources familiar with the matter, first reported by Bloomberg. Musk’s upcoming meeting with government officials in China comes as new tariffs are placed on Tesla’s electric cars amidst the US and China’s ongoing trade dispute.
People familiar with the visit further claim that Musk is set to visit Beijing on Wednesday or Thursday. No further details about the China trip were provided, though speculations are high that Musk’s meeting could have something to do with Tesla’s upcoming factory in the country.
Considering the new tariffs that China placed on American-imported vehicles as retaliation over the United States’ 25% duties on $34 billion worth of Chinese imports last week, Tesla’s upcoming factory in the country is more important than ever. Having a facility in China, after all, would enable Tesla to bypass the tariffs being levied on its vehicles by simply manufacturing its electric cars in the country.
Tesla’s factory in China has been a long time coming. In Tesla’s Q3 2017 earnings call last November, Elon Musk stated that having a local factory in China was the “only way” to make its electric cars affordable in the region. During the call, Musk further stated that the China facility would not incorporate the production of the Model S sedan and Model X SUV. Instead, it will be tasked with the production of the Model Y crossover, as well as some of the Model 3.
Musk reiterated Tesla’s plans for China in its Q1 2018 earnings call. While responding on a question from CNBC’s Phil LeBeau about the Model Y, the Tesla Semi, and the company’s future vehicles, Musk stated that Tesla expects to announce the location of the China factory soon. Musk further noted that the facility, which will be a Gigafactory, will incorporate both battery and vehicle production.
Tesla’s Gigafactory in China reportedly saw difficulties over its ownership. Earlier this year, reports emerged stating that Tesla and the Shanghai government were in disagreement over the ownership of the facility, with the electric car maker demanding sole proprietorship, and China’s officials calling for a local partner. Shanghai officials, however, denied any disagreements with Tesla, stating that government officials and the electric car maker are seeing eye-to-eye.
Tesla’s China Gigafactory plans got its big break in May, when, amidst China’s revised ownership laws, Tesla was granted a permit to operate and establish a solely-owned factory in the country. By May 16, Tesla was hiring for a facility in Shanghai through its official WeChat account, with positions such as project managers, tax commissioners, government affairs managers, financial service area managers, low-voltage electrical test engineers, and IT field system administrators being included in its available job listings.
Elon Musk is determined to make Tesla profitable on Q3 or Q4 2018. After encountering record losses for several quarters, Musk noted in the first quarter earnings call that it was high time for Tesla to become profitable. In a series of tweets last May, Musk also predicted that the “short burn of the century” would be coming soon. With this in mind, Musk’s trip to Shanghai this week, as well as his visits to Beijing, could very well be one of the ways for the company to reinvigorate its investors’ confidence, some of which was shaken last week when Tesla released its Q2 2018 delivery and production numbers.
If any, Musk’s trip to China appears to have already affected Tesla’s stock (NASDAQ:TSLA). With news of the China trip being reported, Tesla’s investors appear to have experienced a new bout of confidence. As of writing, Tesla stock is trading up 1.29% at $312.86 per share during Monday’s intraday, ending a weeklong dive.
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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