Elon Musk's Bold Challenge to Tesla Skeptics Amid AI Advancements

Why Elon Musk is daring his doubters to sell

It's a seriously big idea to get your head around, and not one that easily fits into the spreadsheet model of an analyst or fund manager. But this concept is also central to Musk's basic Tesla pitch. Either you think he's going to solve the great challenges of AI - fully self-driving cars and fully autonomous, humanoid robots for use in industry and the home - or you don't. Musk says that if you do think he can solve these problems, then everything else - geopolitical concerns, worries about Tesla's shrinking margins, the seemingly endless delays to the release of its new products, the pressure it's facing from Chinese electric vehicle makers - is just noise. And if you don't think Musk can solve AI, then his message was simple: sell your Tesla shares. It's a stark choice, but Musk is completely right. This stock is now a battleground between the believers who are prepared to look past the growing challenges in Tesla's real-world business to this AI future, and the doubters who see a company struggling to catch its next growth wave. Tesla's shares fell almost 7 per cent in after-hours trade following the release of the June quarter numbers, which fell short of Wall Street profit estimates for the fourth straight quarter. While vehicle deliveries have improved in the last six months, this has come at the expense of profits, as Tesla cut prices to compete against cheaper Chinese EVs, and extended more generous financing to buyers. Despite cutting about 10 per cent of its workforce, the group's closely watched automotive gross margin (which excludes the regulatory credits it sells to other car makers to help them comply with emissions mandates) fell to 14.6 per cent in the second quarter, compared with 16.4 per cent in the first quarter. The pressure on profits is set to persist. European tariffs on EVs manufactured in China have hurt Tesla's production in that country, while tariffs on raw materials are also pushing up production costs. Tesla's strategy of shifting production to low-cost countries like Mexico is also now under threat. Musk says Donald Trump's threat of tariffs against Mexico means Tesla has little choice but to wind back its investment there for now. Musk endorsed Trump's bid for the White House just hours after some crank took a pot shot at him two weeks ago, and has promised to donate $US45 million a month to the campaign. Whether that is a bid to win favour with Trump, who detests EVs, and buy Tesla some protection, isn't clear. Musk attempted to argue Tuesday night that any move by Trump to tear apart the climate initiatives in the Inflation Reduction Act would be harder on other car manufacturers than it would be on Tesla. But again, Musk told investors they shouldn't miss the forest for the trees. Stuff like politics means nothing if Tesla can pull off its artificial intelligence plans. "These other things are in the noise, relative to autonomy." The logic of Musk's vision for driverless cars and humanoid robots is sound enough; Tesla's plan to move into robotaxis - driverless cars that consumers would summon at will, eliminating the need for car ownership - is clearly attractive. But at the same time, we've been hearing about this for years, and the prize always seems just out of reach. Again on Tuesday, Musk insisted that the technology is well advanced, and that unsupervised self-driving could be possible by the end of this calendar year - or definitely early next. A big investor presentation on the robotaxi business model scheduled for August 8 has now been pushed back to October 10, and it's not clear exactly what we'll get then. A concept? A working prototype? A business model that still requires technological advances and regulatory approval? Investors want detail, and what they're getting is blue sky. Musk's glorious AI vision also faces some real-world problems. He complained that Tesla's AI ambitions were being constrained by the fact that demand for Nvidia chips is so high, and pricing was so expensive, that Tesla had no choice but to double down on its own AI capacity. "I am quite concerned about being able to get state-of-the art Nvidia GPUs when we want them," Musk said. So what did we really learn from Tesla's June quarter earnings? For all of Musk's malarky, he has neatly defined the issue facing investors. As Tesla itself says, it is stuck between two growth waves. Its first generation of EVs have taken it to a position of strength in the EV market, but the business is now being seriously challenged by rapidly growing Chinese rivals and geopolitical issues. And while its big AI vision should deliver a new chapter of growth, it remains a work in progress. The rollercoaster of Tesla's share price this year illustrates the market's confusion: the stock plunged 43 per cent to start the year, and has since surged 73 per cent to leave the stock broadly unchanged year-to-date. Investors should simply follow Musk's advice. If you believe his AI vision, hold. If you don't, then sell.

Elon Musk's Strong Conviction Highlighted By Gene Munster: 'Anyone Who Doesn't Believe That Tesla Will Solve Vehicle Autonomy Should Not Hold Tesla Stock' - Tesla (NASDAQ:TSLA)

The stock of Tesla Inc. TSLA experienced a significant drop in after-hours trading following a bold statement by CEO Elon Musk regarding vehicle autonomy. The stock's plunge came despite the company's second-quarter financial results, which were described as "impressive" by Jim Cramer. What Happened: Gene Munster, a tech analyst at Deepwater Asset Management highlighted Musk's statement during the second-quarter financial results call on X. "I recommend anyone who doesn't believe that Tesla will solve vehicle autonomy should not hold Tesla stock. They should sell their Tesla stock. If you believe Tesla would solve autonomy should buy Tesla stock. And all these other questions are noise," Musk said. Musk also responded to Munster's post on X, commenting, "Yup." Despite the stock's decline, Cramer expressed his admiration for the conference call, particularly Musk's insights on autonomy, humanoids, and batteries, in a post. Cramer said, "I know that Tesla's stock is down in after hours but, holy cow, what a terrific conference call: tutorial on autonomy, humanoids, batteries...really impressive..." See Also: Investors Anticipate Unraveling Of 'Trump Trade' As Biden Exits Presidential Race, But Analyst Says 'It's A Bit Too Early For The Markets To Declare Victory For Trump' Why It Matters: The drop in Tesla's stock comes on the heels of the company's second-quarter financial results, which were a mixed bag. While the company's revenue of $25.5 billion beat the Street's consensus estimate, the EPS, operating margins, and free cash flow fell short, leading to a post-market session decline in Tesla's stock. Musk also discussed various aspects of the company's operations during the call, including a robotaxi delay and the company's energy business. Moreover, Musk has been in the news for other reasons as well. He recently initiated a poll on X (formerly Twitter) to gauge whether Tesla should invest $5 billion in his AI company and Grok-parent, xAI. Additionally, Musk refuted claims of donating $45 million monthly to former President Donald Trump's campaign in an interview with psychologist and conservative commentator Dr. Jordan Peterson. Price Action: Tesla's stock closed at $246.38 on Tuesday, down 2.04% for the day. In after-hours trading, the stock fell further 7.77%. Year to date, the stock has decreased by 0.82%, according to data from Benzinga Pro. Read Next: Jeff Bezos-Era 'Downstream Impact' Losing Its Mojo? Amazon CEO Andy Jassy Is Reportedly Rethinking Alexa Devices Business Model Resulting In Billions Worth Of Losses Image Via Shutterstock This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote Market News and Data brought to you by Benzinga APIs