Investor's Corner
The Tesla Model 3 is replacing BMW as the US’ ‘Ultimate Driving Machine’
German-made automobiles have established their reputation for their excellence in selected segments. While Mercedes-Benz prides itself on building its vehicles for comfort and class, BMW prides itself on its cars’ driving performance. This is the reason behind BMW and its “Ultimate Driving Machine” moniker. Yet, in the electric age, there seems to be a single car that is steadily hacking into BMW since it was unveiled — the Tesla Model 3.
Bloomberg recently released the fourth part of its Model 3 survey, which aggregated data from 5,000 Tesla owners about their experiences and insights about the all-electric sedan. This time around, the publication focused on the Model 3’s effect on the market. And based on the results of its study, it appears that the Model 3 is now taking away customers from legacy automakers, including those who previously only had more affordable vehicles, as well as those that prioritize performance above all else.
Data gathered by the publication showed that the BMW 3 Series was among the most popular cars that were traded in by owners who bought a Model 3. The BMW 3 Series joins other, more affordable vehicles like the Toyota Prius, the Honda Accord, and the Toyota Camry, as some of the top vehicles that have been traded-in for the all-electric vehicle. This means that customers are making a stretch to acquire the Model 3, and BMW 3 Series owners are likely coming over to Tesla due to driving performance.
This was mentioned by some respondents in Bloomberg‘s study. “I’ve owned three BMW 3 Series and was a diehard BMW fan. The Tesla blows those cars away,” one respondent noted.
It could be said that BMW is the veteran carmaker that is most vulnerable to the assault of the Tesla Model 3. Other carmakers whose vehicles are being traded-in frequently for Tesla’s midsize sedan such as Toyota have an extremely large presence in the United States. Thus, even if the Prius and the Corolla and the Camry take hits due to the Model 3, the company still has a healthy market share in America. This is not the case with BMW.
With this in mind, BMW stands to lose far more than automakers like Toyota due to the Model 3’s advance. Couple this with benchmarking tests against the Model 3 such as those conducted by BBC‘s Top Gear, which concluded that “Electric Beats Petrol! Tesla Model 3 Outguns BMW M3” after the EV beat the petrol-powered car by 2 seconds at the Thunderhill Raceway Park in California, and the German automaker might very well find itself on dire straits soon. This was reflected in Bloomberg‘s study, which listed BMW as the most vulnerable brand against Tesla.
There are many things about the Model 3 that its owners love, but one former BMW X5 owner provided some deeper insight to the publication. According to the former BMW owner, Tesla’s consistent software updates make her vehicle feel brand new all the time, and it is simply something that is not matched by any other carmaker today.
“One of the things I absolutely adore about the Model 3 is that I feel like I get a new car about every 12 weeks. I have so many features now that I didn’t have when I bought the car a year ago. Normally, at about a year, year-and-a-half of ownership I’m already scouting out the freeways for what looks good, and I find that I don’t do that with the Model 3,” the Model 3 owner said.
The fourth part of Bloomberg‘s Model 3 survey could be accessed here.
Tesla has scheduled its Earnings Call for Q4 and Full Year 2025 for next Wednesday, January 28, at 5:30 p.m. EST, and investors are already preparing to get some answers from executives regarding a wide variety of topics.
The company accepts several questions from retail investors through the platform Say, which then allows shareholders to vote on the best questions.
Tesla does not answer anything regarding future product releases, but they are willing to shed light on current timelines, progress of certain projects, and other plans.
There are five questions that range over a variety of topics, including SpaceX, Full Self-Driving, Robotaxi, and Optimus, which are currently in the lead to be asked and potentially answered by Elon Musk and other Tesla executives:
- You once said: Loyalty deserves loyalty. Will long-term Tesla shareholders still be prioritized if SpaceX does an IPO?
- Our Take – With a lot of speculation regarding an incoming SpaceX IPO, Tesla investors, especially long-term ones, should be able to benefit from an early opportunity to purchase shares. This has been discussed endlessly over the past year, and we must be getting close to it.
- When is FSD going to be 100% unsupervised?
- Our Take – Musk said today that this is essentially a solved problem, and it could be available in the U.S. by the end of this year.
- What is the current bottleneck to increase Robotaxi deployment & personal use unsupervised FSD? The safety/performance of the most recent models or people to monitor robots, robotaxis, in-car, or remotely? Or something else?
- Our Take – The bottleneck seems to be based on data, which Musk said Tesla needs 10 billion miles of data to achieve unsupervised FSD. Once that happens, regulatory issues will be what hold things up from moving forward.
- Regarding Optimus, could you share the current number of units deployed in Tesla factories and actively performing production tasks? What specific roles or operations are they handling, and how has their integration impacted factory efficiency or output?
- Our Take – Optimus is going to have a larger role in factories moving forward, and later this year, they will have larger responsibilities.
- Can you please tie purchased FSD to our owner accounts vs. locked to the car? This will help us enjoy it in any Tesla we drive/buy and reward us for hanging in so long, some of us since 2017.
- Our Take – This is a good one and should get us some additional information on the FSD transfer plans and Subscription-only model that Tesla will adopt soon.
Tesla will have its Earnings Call on Wednesday, January 28.
Elon Musk
Tesla locks in Elon Musk’s top problem solver as it enters its most ambitious era
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla has granted Senior Vice President of Automotive Tom Zhu more than 520,000 stock options, tying a significant portion of his compensation to the company’s long-term performance.
The generous equity award was disclosed by the electric vehicle maker in a recent regulatory filing.
Tesla secures top talent
According to a Form 4 filing with the U.S. Securities and Exchange Commission, Tom Zhu received 520,021 stock options with an exercise price of $435.80 per share. Since the award will not fully vest until March 5, 2031, Zhu must remain at Tesla for more than five years to realize the award’s full benefit.
Considering that Tesla shares are currently trading at around the $445 to $450 per share level, Zhu will really only see gains in his equity award if Tesla’s stock price sees a notable rise over the years, as noted in a Sina Finance report.
Still, even at today’s prices, Zhu’s stock award is already worth over $230 million. If Tesla reaches the market cap targets set forth in Elon Musk’s 2025 CEO Performance Award, Zhu would become a billionaire from this equity award alone.
Tesla’s problem solver
Zhu joined Tesla in April 2014 and initially led the company’s Supercharger rollout in China. Later that year, he assumed the leadership of Tesla’s China business, where he played a central role in Tesla’s localization efforts, including expanding retail and service networks, and later, overseeing the development of Gigafactory Shanghai.
Zhu’s efforts helped transform China into one of Tesla’s most important markets and production hubs. In 2023, Tesla promoted Zhu to Senior Vice President of Automotive, placing him among the company’s core global executives and expanding his influence beyond China. He has since garnered a reputation as the company’s problem solver, being tapped by Elon Musk to help ramp Giga Texas’s vehicle production.
With this in mind, Tesla’s recent filing seems to suggest that the company is locking in its top talent as it enters its newest, most ambitious era to date. As could be seen in the targets of Elon Musk’s 2025 pay package, Tesla is now aiming to be the world’s largest company by market cap, and it is aiming to achieve production levels that are unheard of. Zhu’s talents would definitely be of use in this stage of the company’s growth.
Tesla analyst Andrew Percoco of Morgan Stanley teased the company’s dominance in its self-driving initiative, stating that its lead over competitors is “not even close.”
Percoco recently overtook coverage of Tesla stock from Adam Jonas, who had covered the company at Morgan Stanley for years. Percoco is handling Tesla now that Jonas is covering embodied AI stocks and no longer automotive.
His first move after grabbing coverage was to adjust the price target from $410 to $425, as well as the rating from ‘Overweight’ to ‘Equal Weight.’
Percoco’s new note regarding Tesla highlights the company’s extensive lead in self-driving and autonomy projects, something that it has plenty of competition in, but has established its prowess over the past few years.
He writes:
“It’s not even close. Tesla continues to lead in autonomous driving, even as Nvidia rolls out new technology aimed at helping other automakers build driverless systems.”
Percoco’s main point regarding Tesla’s advantage is the company’s ability to collect large amounts of training data through its massive fleet, as millions of cars are driving throughout the world and gathering millions of miles of vehicle behavior on the road.
This is the main point that Percoco makes regarding Tesla’s lead in the entire autonomy sector: data is King, and Tesla has the most of it.
One big story that has hit the news over the past week is that of NVIDIA and its own self-driving suite, called Alpamayo. NVIDIA launched this open-source AI program last week, but it differs from Tesla’s in a significant fashion, especially from a hardware perspective, as it plans to use a combination of LiDAR, Radar, and Vision (Cameras) to operate.
Percoco said that NVIDIA’s announcement does not impact Morgan Stanley’s long-term opinions on Tesla and its strength or prowess in self-driving.
NVIDIA CEO Jensen Huang commends Tesla’s Elon Musk for early belief
And, for what it’s worth, NVIDIA CEO Jensen Huang even said some remarkable things about Tesla following the launch of Alpamayo:
“I think the Tesla stack is the most advanced autonomous vehicle stack in the world. I’m fairly certain they were already using end-to-end AI. Whether their AI did reasoning or not is somewhat secondary to that first part.”
Percoco reiterated both the $425 price target and the ‘Equal Weight’ rating on Tesla shares.
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