By: Kyle Xu
When Tesla’s stock dropped six percent after last week’s earnings report, chief executive Elon Musk had a lot to do. Most investors doubted his ability to sell millions of cars a year, so Musk attempted to convince Wall Street that the company’s legacy will come from artificial intelligence and not just selling cars.
Investors saw Tesla as the world’s most valuable car company because Mr. Musk stated that he would be able to sell 20 million cars a year. However, the car company only managed to sell 1.8 million last year, still many times shy of reaching Toyota’s 11 million cars sold.
Perhaps Tesla would’ve been able to reach 20 million if they had a steady increase in 2024, but during the last six months, Tesla sales have fallen. In fact, the last earnings report reported a 45 percent drop in second-quarter profit.
Mr. Musk’s grand plan, though, is to focus more on self-driving AI. This includes not only autonomous vehicles but also autonomous taxis. Mr. Musk has said that people who own Teslas can rent them to the company while they sleep, so that a Tesla will be able to accommodate some person in need of a taxi halfway across town.
As for autonomous driving, Tesla currently sells two AI driving programs, Autopilot and Full Self-Driving. Full Self-Driving, which costs 99 dollars a month, has a potential to earn profits, according to several Wall Street investors. However, the technology is not yet perfect as the AI programs have caused many accidents, 29 of them fatal, inspiring many lawsuits.
If Musk’s ambitious dreams of AI come true, though, it could boost Tesla’s stock from 740 billion dollars to the trillions. Five trillion is possible, says Tom Narayan, a stock analyst at RBC Capital Markets, although it was closely followed by doubts related to competition from other companies such as Waymo, which have had years to train its taxis.
Ross Gerber, chief executive of Gerber Kawasaki Wealth and Investment Management, however, expresses his doubts. “It’s a super competitive business that’s barely profitable,” he said.
Maybe one day, Tesla will strike gold using AI – as of now, though, it remains in a deep, deep, mine of only rock and stone.