Tesla (TSLA, Financial) reported its third-quarter earnings, bringing focus back to its fundamentals after a recent event showcasing its robotic technology fell short of expectations. The company's stock has declined by about 11% this year. Despite the event, held in a Californian studio setting, introducing the Cybercab robotaxi prototype and promoting a vision of autonomous future transportation, Tesla continues to grapple with familiar challenges. These include sales and profit growth, slowing demand, competition from rising Chinese EV manufacturers, and CEO Elon Musk's ability to deliver on promises.
Analysts from Barclays indicated that Tesla's attention is refocusing on its fundamentals, such as demand prospects and profit stabilization. They noted the potential for third-quarter results to be a short-term positive catalyst if they exceed expectations, while cautioning that profit margins have already bottomed out.
Concerns over demand persist, as highlighted by a Wall Street Journal report about Musk appointing a key associate to oversee operations in North America and Europe. Meanwhile, Tesla's autonomous driving technology faces regulatory scrutiny following reports of accidents under certain conditions like fog and glare. The National Highway Traffic Safety Administration noted incidents involving pedestrian fatalities and injuries.
The Burbank event titled "We, Robot" also introduced the Robovan vehicle and a new version of the humanoid robot Optimus. The robotaxi, devoid of steering wheels or pedals, is expected to be priced under $30,000. Full self-driving technology rollout in Texas and California for Model 3 and Model Y is anticipated next year, with Cybercab production goals set for "before 2027." Musk admitted to being overly optimistic about timelines.
Bernstein analyst Toni Sacconaghi criticized the event as "disappointing," lacking significant detail. Meanwhile, William Blair's Jed Dorsheimer and Morgan Stanley's Adam Jonas questioned the competitive threat Tesla posed to Uber and Google's Waymo. Conversely, Bank of America analysts remarked the event met expectations, suggesting now might be an opportune moment for Tesla to raise low-cost capital. They highlighted Tesla's substantial investments in robotaxis, robotics, and AI, which demand significant capital amidst challenges in its core EV business.
