It is no secret that Elon Musk envisions Tesla (TSLA) as more than just a company that only makes electric cars.
In April 2024, during Tesla's 2024 first-quarter earnings report, Musk sternly warned investors that the company "should be thought of as an AI robotics company."
"If you value Tesla as just an auto company — it’s just the wrong framework," Musk said. "If you ask the wrong question, the right answer is impossible.”
Fast forward to July 23, and Musk's sentiment has not changed.
"The value of Tesla overwhelmingly is autonomy. These other things are, I think, no way it's relative to autonomy," he said.
"I recommend anyone who doesn't believe that Tesla would sell vehicle autonomy should not hold Tesla stock. They should sell their Tesla stock. If you believe Tesla will sell autonomy, you should buy Tesla stock. And all these other questions are in the noise."
A mixed bag of Musk
The rhetoric delivered during the earnings call has triggered a mixed reaction from analysts who listened in.
Some analysts maintained their bullish, including Wedbush's Dan Ives, who kept his "outperform" rating in a note published on July 24.
He believes that Tesla's shift away from EVs is the start of something much bigger in the future.
"The next phase of the Tesla growth story is around autonomous, Robotaxis, and AI playing out for Musk & Co. in our view, and that vision is on the doorstep," Ives wrote.
"Musk gave a new date for the historic robotaxi rollout with October 10th being Robotaxi Day and this will unleash the beginning of the AI story at Tesla which we value at $1 trillion alone over the next few years."
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Conversely, Seth Goldstein at Morningstar views what was said during the earnings call differently.
In his analyst note published early July 14, he wrote that he views Tesla shares as "slightly overvalued," citing that "management declined to offer vehicle-specific details" about its 'affordable vehicle.'
Additionally, he pointed out that even if the company is working on autonomous vehicle technology or robotaxis, they "think Tesla may face regulatory delays in approving robotaxis as regulators, or just approving limited rollouts, leading to little incremental revenue in the coming years."
Tesla reaches crossroads
Automotive experts are also skeptical about Tesla's big push toward artificial intelligence. Notably, this change in direction comes at the expense of other Tesla products, especially one that could benefit overall sales of electric vehicles.
In a statement to TheStreet, Jalopnik contributor Collin Woodard said that the long-awaited $25,000 'affordable' Tesla feels "like something Musk throws out there to placate the people" who think Tesla is still a serious automaker.
However, with almost all the focus on other projects, the idea of a cheaper car remains far-fetched.
"To be fair to Tesla, building cars is hard, and building a usable EV in the U.S. at a sub-Model 3 price point is going to be even harder," Woodard told TheStreet. "If your CEO is continually diverting resources to robotics and AI, I don't know if it's even possible. I wouldn't be surprised if it's basically at the bottom of [Musk's] priority list at this point."
Related: Elon Musk thinks Tesla can make what GM, Google can’t
AutoForecast Solutions Global Vehicle Forecasting VP Sam Fiorani explained that Tesla is at a "crossroads." As time progresses, its products become less ubiquitous and profitable in a competitive automotive market.
"In order to remain a stock market darling, Tesla needs to avoid being viewed as a legacy automaker, and they want to do that through AI, robotics, and automated driving," Fiorani said. "As has been their modus operandi, each Tesla product generates the revenue necessary to fund the next wave of products."
However, as Seth Goldstein pointed out, a long process has to be completed before any of Musk's wishlist items can be fulfilled, whether through product development or regulatory approval before heading to market.
Nonetheless, Woodard warned not to take Musk's words at face value.
"I'm no finance or programming expert, but I'd still caution analysts to be a lot more skeptical of Musk's claims. Someone telling you that every single person on the planet is going to buy their product is always a red flag no matter how rich or successful they are."
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