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Investor's Corner

What the Tesla Model 3 Means for the Planet’s Future

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Tesla Model 3

Tesla CEO Elon Musk’s overarching goal of converting the world from using fossil fuel powered cars to electric vehicles is coming to fruition. Or so it would seem after the company has secured nearly 300,000 reservations on its upcoming mass-market Model 3.

But is the world really on the cusp of a green car revolution? According to the Washington Post, our enthusiasm should be tempered with a healthy dollop of reality. “Even if Tesla manages to scale up and hit its very aggressive target of 500,000 vehicles a year by 2020, that would still represent only about .5 percent of global light-duty vehicle sales,” said Colin McKerracher, head of advanced transport at Bloomberg New Energy Finance. “So it’s hard to have an overall impact from them alone.”

The U.N.’s Intergovernmental Panel on Climate Change estimates that greenhouse gas emissions from transportation transportation total 7 billion tons annually. That number is projected to rise to 12 billion tons by 2050 in the absence of any significant policy shifts. Several experts suggested this week that booming sales of Tesla automobiles won’t have a significant impact on the global vehicle market.

Today, global sales of light duty vehicles are a staggering 88.5 million a year according to Navigant Research. That number is expected to grow dramatically as sales in India and Asia skyrocket in the years ahead. In comparison, 500,000 Teslas are just the proverbial drop in the bucket.

The real question is what effect the success of the Model 3 will have on global cultural norms and other manufacturers. “It’s obviously important for Tesla, but I think it’s going to push other automakers to match what Tesla’s doing, and also get other people to think about switching to electric,” said David Reichmuth, a senior engineer in the clean vehicles program at the Union of Concerned Scientists.

Bloomberg New Energy Finance predicts electric vehicles sales will total less than 5% of total global sales until 2022. After that, falling battery prices will finally make electric cars truly price competitive with conventional cars. Bloomberg thinks it will be 2040 before the number of electric cars sold each year gets really impressive. By then, 35% of cars will be electric and EVs will comprise 25% of the cars in the world.

Regulatory and cultural changes will have a large effect on how rapidly the world decarbonizes the transportation sector. In China, government policies strongly favor electric cars. As a result, sales of so-called "new energy vehicles" -- which include hybrids, plug-in hybrids, and battery electric cars -- are expected to triple this year and continue to expand rapidly in the years to follow. Those policies will alter the Chinese culture. Electric cars will likely be preferred over conventional cars in China within a few years.

Tesla Model X Signature Red offered on Tesla China website (left). Tesla Model S in Chinese showroom (right) [Source: Tesla Motors]

Autonomous cars could also dramatically reduce transportation emissions.That's according to a study by Jeffrey Greenblatt and Samveg Saxena of the Lawrence Berkeley National Laboratory. Tesla obviously is positioning the Model 3 to feature advanced autonomous driving features when it goes into production.

Just like wind and solar power, electric cars may enjoy a period of very rapid growth, but that in and of itself will not solve the world's carbon emissions problem. Will people look back on the introduction of the Model 3 as the "tipping point" when the balance between internal combustion engines and batteries began to shift? Quite possibly. Certainly Tesla is raising awareness about electric cars and forcing other car makers to invest in battery and autonomous technology.

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But there could be a long way to go before the people on earth can say they have conquered their carbon emissions problem. A rhetorician would argue that Tesla is doing what's necessary to promote change but not sufficient to make that change complete.

Feature photo credit: Tesla Motors

 

Investor's Corner

Tesla Board member and Airbnb co-founder loads up on TSLA ahead of robotaxi launch

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member’s purchase.

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(Credit: Tesla)

Tesla Board member and Airbnb Co-Founder Joe Gebbia has loaded up on TSLA stock (NASDAQ:TSLA). The Board member’s purchase comes just over a month before Tesla is expected to launch an initial robotaxi service in Austin, Texas.

Tesla CEO Elon Musk gave a nod of appreciation for the Tesla Board member in a post on social media.

The TSLA Purchase

As could be seen in a Form 4 submitted to the United States Securities and Exchange Commission (SEC) on Monday, Gebbia purchased about $1.02 million worth of TSLA stock. This was comprised of 4,000 TSLA shares at an average price of $256.308 per share.

Interestingly enough, Gebbia’s purchase represents the first time an insider has purchased TSLA stock in about five years. CEO Elon Musk, in response to a post on social media platform X about the Tesla Board member’s TSLA purchase, gave a nod of appreciation for Gebbia. “Joe rocks,” Musk wrote in his post on X.

Gebbia has served on Tesla’s Board as an independent director since 2022, and he is also a known friend of Elon Musk. He even joined the Trump Administration’s Department of Government Efficiency (DOGE) to help the government optimize its processes.

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Just a Few Weeks Before Robotaxi

The timing of Gebbia’s TSLA stock purchase is quite interesting as the company is expected to launch a dedicated roboatxi service this June in Austin. A recent report from Insider, citing sources reportedly familiar with the matter, claimed that Tesla currently has 300 test operators driving robotaxis around Austin city streets. The publication’s sources also noted that Tesla has an internal deadline of June 1 for the robotaxi service’s rollout, but even a launch near the end of the month would be impressive.

During the Q1 2025 earnings call, Elon Musk explained that the robotaxi service that would be launched in June will feature autonomous rides in Model Y units. He also noted that the robotaxi service would see an expansion to other cities by the end of 2025. “The Teslas that will be fully autonomous in June in Austin are probably Model Ys. So, that is currently on track to be able to do paid rides fully autonomously in Austin in June and then to be in many other cities in the US by the end of this year,” Musk stated. 

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Investor's Corner

Tesla hints at ‘Model 2’ & next-gen EV designs

Tesla’s Q1 2025 update confirms new models this year, with production tied to existing factory lines. Could it be time for the Model 2 debut?

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(Credit: Tesla)

During its Q1 2025 earnings call, Tesla executives hinted at the much-rumored “Model 2” and other next-gen EV designs.

Tesla slightly addressed whether or not it will be pushing forward with the debut of new models later this year in its latest earnings call. The company’s product development executive, Lars Moravy, shared some details about Tesla’s design process and the upcoming affordable models.

“We’re still planning to release models this year. As with all launches, we’re working through, like, the last minute issues that pop up. We’re knocking them down one by one. At this point, I would say that the ramp might be a little slower than we had hoped initially…But there’s nothing that’s blocking us from starting production within the next, within the timeline laid out in the opening remarks.

“And I will say it’s important to emphasize that, as we’ve said all along, the full utilization of our factories is the primary goal for these new products. And so the flexibility of what we can do within the form factor and, you know, the design of it is really limited to what we can do on our existing lines rather than building new ones. But we’ve been targeting the low cost of ownership. Monthly payment is the biggest differentiator for our vehicles, and that’s why we’re focused on bringing these new models with the, you know, the lowest price, to the market, within the constraints I just highlighted.”

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In January, Tesla’s Chief Financial Officer Vaibhav Taneja teased several new product introductions for this year. There is at least one product that most Tesla supporters and investors are hoping to see: the company’s affordable vehicles, which have been dubbed by the EV community as the “Model 2” or “Model Q.”

Before Tesla’s Robotaxi event last year, many speculated that the company would also unveil its affordable next-gen vehicle. Gene Munster from Deepwater had expected Tesla to release a stripped-down version of the Model 3 as its affordable vehicle during the Robotaxi event. In the end, Tesla unveiled its Robotaxi vehicle and its Robovan design.

It’s been a while since the Robotaxi event, and Tesla has kept mum about its affordable vehicle. Considering its Q1 2025 performance, TSLA investors look forward to catalysts that could boost the stock.

The “Model 2” has been labeled a potential catalyst for Tesla. As such, TSLA investors and supporters have been itching for news about the new affordable vehicle. The main questions surrounding the “Model 2” revolve around its design and price. Based on Moravy’s statement, the “Model 2’s” design will heavily depend on Tesla’s current assembly lines and supply chain structures.

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Tesla regains Piper Sandler’s confidence with Robotaxi plans & Q1 Results

Piper Sandler says Tesla delivered the best-case scenario for bulls. $TSLA has catalysts ahead to silence the bears.

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(Credit: Tesla)

Tesla gained Piper Sandler analyst Alexander Potter’s confidence following its Q1 2025 earnings call. Piper Sandler reaffirmed its Overweight rating and $400 TSLA price target, signaling optimism for the company’s robotaxi and affordable vehicle launches expected this year. The firm’s stance reflects Tesla’s resilience amid market challenges.

Despite expectations of weak Q1 financials, Tesla’s stock edged up in after-hours trading, defying skepticism. Piper Sandler’s Alexander Potter noted that the results met the hopes of Tesla supporters, particularly as the company held firm on its timelines. Potter emphasized that anticipation for robotaxi details and new vehicle launches should keep critics at bay, supporting the $400 target.

“In our preview last week, we predicted that (at best) Q1 would be a non-event. With the stock trading up slightly in the after-hours session, it appears our best-case scenario has materialized. Considering generally weak Q1 financials, we think this is the best result that TSLA bulls could’ve reasonably hoped for.

“In our view, the most important Q1 takeaway is this: Tesla didn’t hedge expectations re: launching Robotaxis or lower-priced vehicles in 1H25. With <2 months until the end of June, investors can look forward to some interesting catalysts in the weeks ahead. In our view, this alone should be enough to keep the bears at bay, at least until we have a better idea re: the details of Tesla’s new products, as well as the scale/scope of the Robotaxi launch,” wrote Potter.

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Wedbush Securities’ Dan Ives, a longtime TSLA bull, echoed Potter’s optimism for Tesla. Ives raised his price target for Tesla stock from $315 to $350 with a BUY rating. His Tesla upgrade came after Elon Musk’s announcement during the Q1 earnings call that he would reduce his involvement with DOGE, signaling a sharper focus on Tesla.

Tesla’s steady Q1 performance and unwavering commitment to its 2025 roadmap, including the Robotaxi launch and lower-priced models, bolster investor confidence. Piper Sandler’s analysis underscores Tesla’s ability to navigate a competitive electric vehicle market while advancing its technological edge. The upcoming Robotaxi launch and affordable vehicle introductions are pivotal, with analysts expecting these initiatives to drive stock value through 2025.

As Tesla prepares for these milestones, its stock movement reflects market trust in Musk’s vision. With Piper Sandler and Wedbush reaffirming bullish outlooks, Tesla’s strategic moves will remain under close scrutiny, positioning the company to capitalize on its innovation pipeline in a dynamic industry landscape.

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