Why Long-Term Investors Should Pay Attention to TSLA’s Robotaxi Potential

Tesla Inc. (TSLA) It is expected to release its second-quarter shipment update in early July, which is expected to show a second consecutive quarter of declines. Analysts have cut their estimates for TSLA shipments due to concerns about consumer demand and fierce competition from China. In January, the company said its shipment growth in 2024 would be “Especially low” As the impact of price cuts that have continued for several months diminishes.

The EV maker is expected to deliver 438,019 vehicles in the April-June period, according to the average estimate derived from the forecasts of 12 analysts surveyed by LSEG, seven of whom have lowered their expectations in the past three months.

Also, Barclays analyst Dan Levy said: Revises delivery forecast to 415,000 unitsIt recorded an 11% year-over-year decline. He said, “The soft India results may draw attention back to Tesla’s current challenging fundamentals.” Meanwhile, RBC Capital Markets and UBS set their estimates for vehicle deliveries at 410,000 and 420,000 units, respectively.

Tesla for comparison We delivered 386,810 vehicles in the first quarter. It is expected that 466,140 units will be sold in 2024, with the highest sales recorded in the fourth quarter of the previous year, when 484,507 units were sold.

Despite expectations of lower quarterly deliveries, many analysts say investor attention is shifting from quarterly deliveries to TSLA’s longer-term projects, particularly its robotaxi event scheduled for this summer.

High Profile RoboTaxi Event

CEO Elon Musk said the company will be On August 8, 2024, we will unveil the long-promised Robotaxi.. The upcoming autonomous vehicle will be built on Tesla’s next-generation vehicle platform. Musk has long hinted at the possibility of a Tesla robotaxi, and even showed off a fully covered vehicle at a 2023 event where he unveiled the company’s third master plan.

Musk has previously said that Tesla will eventually produce cars without human control. He also mentioned that Tesla vehicles with fully autonomous driving features will continuously improve their driving skills through software updates. He also emphasized that Tesla owners could generate income by sending their autonomous cars to pick up and drop off passengers.

It will be part of the “Tesla Network,” as described in Part 2 of Musk’s master plan. “You can also add your car to the Tesla Shared fleet with just a tap of a button on your Tesla phone app,” he added, adding that it “will generate income while you’re at work or on vacation that can substantially offset, and sometimes even exceed, your monthly mortgage or lease costs.”

A few years later, Musk’s vision expanded even further. In 2019, he declared that “by the middle of next year, there will be over a million Tesla cars on the road with Full Self-Driving hardware.” He also claimed that Tesla’s Full Self-Driving (FSD) feature is so reliable that drivers “will be able to sleep.” However, Teslas equipped with FSD software are not fully autonomous, and drivers should not sleep while using them.

While Musk’s promises don’t always align perfectly with reality, the success of Autopilot and FSD proves that he remains at the forefront of a societal shift from human-driven vehicles to AI-controlled ones.

TSLA’s stock has been in a steady decline, down about 15% since the beginning of the year and more than 25% over the past year. However, it has surged about 16% in the past month as investors increasingly focus on the upcoming Robotaxi event.

Delivery data is essential for EV companies, but investors are looking beyond that, says Ben Kallo, an analyst at Robert W. Baird. famous“Compared to Q124, where investor interest was focused on the near-term delivery estimates being too high, more and more investors are changing their outlook on the August 8 Robotaxi event and the FSD-related opportunities.”

Ben Carlo expects investor interest to remain long-term until the Robotaxi launch, which could include details on the next-generation, low-cost vehicle. Meanwhile, Wedbush Securities analyst Dan Ives doesn’t expect any major fireworks in the June quarter, but believes the 8/8 Robotaxi launch will be a significant catalyst for TSLA.

However, UBS is more skeptical that the Robotaxi event will be an immediate catalyst for TSLA stock. Nevertheless, the firm acknowledges that the EV maker has made significant technological progress with its Robotaxi and Optimus plans, and is more likely than most companies to leverage AI in the physical world, which has long-term benefits for its financial model.

Potential Risks and Challenges

The upcoming Robotaxi event is highly anticipated, but it also presents unique risks and challenges. Self-driving technology is subject to strict regulatory scrutiny. Tesla must navigate a complex legal environment to deploy its Robotaxi vehicles, which could delay implementation and affect the timeline.

TSLA must continue to invest heavily in research and development (R&D) to ensure the reliability and safety of autonomous vehicles. Critics claim that Musk overstates the capabilities of the technology, often with fatal consequences. There have been hundreds of crashes involving Tesla vehicles using FSD and Autopilot, resulting in dozens of deaths. The EV giant is currently facing a number of challenges. wrongful death lawsuit.

The robotaxi initiative has long-term potential, but it requires significant up-front investment. The financial burden of developing and deploying autonomous vehicles could impact Tesla’s short-term profitability.

conclusion

TSLA is due to release its second-quarter India report this week, which analysts expect to see a second consecutive quarter of decline amid weak demand due to a shortage of affordable new cars and fierce competition in China. The India report is due to be released a few weeks before the company releases its second-quarter earnings.

Street expects Tesla’s Q2 (ending June 2024) revenue to be $23.88 billion, down 4.2% year over year. The consensus EPS estimate of $0.58 for the same period would represent a 35.9% year over year decline.

Despite the expected decline in deliveries and weak quarterly results, several market experts suggest that investors’ attention is shifting to Tesla’s long-term projects, particularly the high-profile Robotaxi event scheduled for August of this year. As the EV manufacturer navigates the challenges and opportunities ahead, the Robotaxi initiative is a significant development that could redefine its future trajectory.

While short-term concerns persist, including weak consumer demand, regulatory hurdles, and ongoing legal challenges, long-term investors are increasingly focused on Tesla’s ambitious autonomous driving vision. The event is poised to showcase the company’s technological advancements and could serve as a catalyst to restore investor confidence.