The latest Tesla earnings call was confusing. Instead of talking about the company’s core auto business, which generates over 80 percent of its revenue, CEO Elon Musk used his time to discuss Tesla’s AI efforts.
Musk said Tesla would “go ballistic” on AI moving forward, leaving listeners, onlookers, and analysts scratching their heads.
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Tesla is shifting the goalposts
In another note to clients, Morgan Stanley analyst Adam Jonas asked, “Is this a car company? Almost no discussion of the core auto business. While around 80% of the company’s revenue is (still) automotive, the discussion during the prepared remarks and Q&A was almost entirely around autonomy, AI, and robotics. We see a pattern here.”
Tesla has long been focused on automation, continually promising that unsupervised self-driving will come “soon,” a refrain we’ve heard for over a decade. Its AI efforts dovetail with automation, which also has roots in machine learning.
The issue is that Tesla is not an AI company. Musk may envision or want it to be that, but it is not.
Tesla
Tesla car news is not great
Lost in the fervor around AI at Tesla was the fact that sales are down year over year for the first time in over a decade. Vehicle production was down four percent, and deliveries were down one percent.
According to Tesla’s earnings call deck, the Model 2—or Model Q, maybe—a more affordable entry-level vehicle—is still coming, but there is no word on when. Deutsche Bank believes the model will still be released in the first half of 2025, so an earnings call would be the perfect time to discuss a sub-$30,000 car that would undoubtedly boost sales. Investors once went ballistic when Musk tried to kill plans for that vehicle.
Musk also didn’t mention the Cybertruck. As for Tesla’s semi truck, it’s set to begin production in Nevada later this year.
Related: Musk says Tesla unsupervised robotaxi is coming this June
Tesla
Tesla is not earning anything from AI (yet)
AI does not generate revenue for Tesla. Although the company is launching a robotaxi service soon in Austin, Texas, and has its Optimus robot on the horizon, those do not earn Tesla any money today.
Supervised Full Self-Driving exists, but it is not full automation, much less AI. Unsupervised Full Self-Driving, which Musk says will allow drivers to sleep while the car drives itself, is still not available.
But Musk talks about these things in earnings calls because these are the things Musk wants to talk about in earnings calls. He envisions Tesla as an automation-first company, not a company making cars, SUVs, and a truck for people to drive.
In an earnings call, investors typically want to hear about company performance and how earnings will increase next year. Side projects and future plans are essential as footnotes, so Musk’s focus on them should trouble investors.
While Tesla stock dipped just after the earnings call, it rebounded in after-hours trading.
Related: Tesla drops Cybertruck lease price dramatically, offers free wrap
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Final thoughts
Musk has many projects, including Tesla, SpaceX, Neuralink, X, Hyperloop, and The Boring Company. Some say those are far too many for one person to reasonably and reliably work on, and with his recent involvement in government affairs, we can only wonder how much attention he can relay to them.
He may be bored with the minutiae of stability, but investors typically want to hear the boring details in earnings calls. It’s fortunate Tesla’s year-over-year dip wasn’t more significant, but if it ever is, we expect Musk will still talk about what’s down the line, not in front of his face.
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