Investor's Corner
Tesla (TSLA) rises amid hints of Fremont plant’s production boost, new hiring ramp
Tesla stock (NASDAQ:TSLA) is showing some momentum on Tuesday amidst the release of a leaked memo from Automotive President Jerome Guillen, which pointed to an upcoming production boost in the company’s Fremont, CA factory, as well a renewed hiring ramp. Guillen also provided some updates in the progress of Gigafactory 3 in Shanghai, which is being constructed at a rapid rate.
The President of Automotive was quite cautious in his message, stating that while he can’t give any specific information at this point, he is confident that Tesla employees will be “delighted” at the upcoming developments in the company. The executive added that the company hit “new records in all production lines for output and efficiency” during Q2 2019 while maintaining record quality. This is true for both the Fremont factory, where the Model S, 3, and X are produced, as well as Gigafactory 1, where the Model 3’s 2170 battery cells and drive units are manufactured.
Perhaps quite surprisingly, Guillen’s leaked note also included a section where the Automotive President urged employees to inform their friends and acquaintances that there are a lot of open positions in the company. “As we continue to ramp up production, please tell your friends and neighbors that we have lots of exciting new positions open, both in Fremont and at Giga,” Guillen wrote. This is notable, mainly since Tesla CEO Elon Musk has conducted a series of job cuts in previous months in an effort to keep Tesla as lean and efficient as possible. A new hiring ramp then suggests that Tesla is preparing to tackle projects that cannot be accomplished with its existing team.
Tesla, for its part, has not released a comment about the Automotive President’s leaked memo.
The contents of Guillen’s memo appear to have been appreciated by TSLA shareholders, as shown by the electric car maker’s 2% rise during Tuesday’s pre-market. This is quite understandable, considering that a production boost, a renewed hiring ramp, and quick progress in Gigafactory 3 all bode well for Tesla’s future.
In the aftermath of the first quarter’s lower-than-expected results, Tesla stock experienced a steep drop, thanks in no small part to a bearish thesis which suggested that the demand for the company’s vehicles has declined. Elon Musk debunked this point during the 2019 Annual Shareholder Meeting, and it was further trampled by Tesla’s record production and delivery numbers in Q2 2019.
Jerome Guillen’s leaked memo could then be perceived as yet another nail in the “demand problem” thesis. After all, it would not make much sense for Tesla to increase its production rates if the demand for its vehicles is dropping, nor would it start hiring more employees to manufacture and push its electric cars. Considering that Tesla seems to be poised to ramp its operations, it appears that the company is actually facing an increasing demand for its vehicles.
A scenario where Tesla’s vehicles are seeing more demand is actually quite feasible, especially since several territories are yet to be saturated by the company’s first mass-market vehicle, the Model 3. Tesla is yet to start delivering the electric sedan to several key right-hand-drive markets like Australia and Japan, and the company is also yet to begin producing the locally-made versions of the vehicle in China. With these projects still in the pipeline, it appears that Tesla’s growth story is far from being remotely finished.
As of writing, Tesla stock is trading +2.16% at $235.04 per share.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.
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.
Tesla is not sparing any expense in ensuring the Cybercab is safe
Tesla’s Elon Musk gives timeframe for FSD’s release in UAE
