Tesla ditches cheap electric car plan, shifts to robotaxis

Tesla has made a surprising about-face, cancelling its plans for a long-awaited affordable electric car and instead pouring resources into developing self-driving robotaxis, according to a Reuters report. Now the future of electric mobility just got a whole lot more interesting!The scrapped vehicle, often referred to as the "Model 2," was intended to be a $25,000 entry point for budget-conscious consumers and a key driver of Tesla's growth into the mass market. However, the company now cites fierce competition from established Chinese automakers offering a range of affordable EVs as the reason for abandoning the project.This strategic shift marks a significant change of course for Tesla. CEO Elon Musk has long championed the idea of an affordable electric car, even calling it a core mission of the company. His original "master plan" envisioned using profits from luxury models to finance the development of a "low cost family car."Despite Musk's repeated promises, the affordable car project has faced numerous delays. In January, Reuters reported on Tesla's plans to begin production in the latter half of 2025, only to be contradicted by this recent announcement.While details remain murky, Tesla seems to be betting big on robotaxis, a technology with the potential to revolutionize transportation. However, this path is fraught with challenges. Regulatory approval and the complexity of autonomous driving technology pose significant hurdles. Furthermore, Tesla faces competition in the robotaxi space as well.This news comes amidst a period of scrutiny for Tesla. Musk's involvement in various ventures like SpaceX and Twitter has raised questions about his focus on Tesla. Additionally, the company's ambitious sales targets seem less achievable without the affordable car to drive volume.Tesla's stock price initially dipped on the news but recovered somewhat after Musk refuted the report on social media. He even announced an upcoming "Tesla Robotaxi unveil" on August 8, further emphasizing the company's new direction.

Tesla ventures into TV advertising

In a surprising shift, Tesla, the electric vehicle giant known for its unconventional marketing strategies, has recently delved into TV advertising. This move marks a departure from its long-standing practice of relying solely on social media and word-of-mouth to promote its products.For years, the debate over whether Tesla should embrace traditional advertising has raged on. Advocates argue that with the company's growing production capacity and expanding market reach, conventional advertising could further fuel its growth. However, skeptics contend that Tesla's strong online presence renders traditional advertising unnecessary.Elon Musk's recent concession to trial advertising, particularly targeting online platforms like YouTube, seemed to align with the company's digital-first approach. Yet, the sudden surge in Tesla ads on YouTube has left some questioning the effectiveness of this strategy.Critics argue that bombarding existing customers with ads may yield diminishing returns and could be perceived as wasteful spending. Instead, they propose that Tesla should focus on reaching new markets, particularly those less tech-savvy demographics who still rely on traditional media like television.As Tesla transitions from being a niche product for early adopters to a mainstream choice for the masses, the need for broader market exposure becomes increasingly evident. Proponents of TV advertising argue that it could normalize the brand and instill confidence in potential buyers who may still perceive Tesla as unconventional.With Tesla's growing presence on the roads and its products becoming more familiar sights, the timing for TV advertising seems ripe. As the company navigates this new frontier, the effectiveness of its advertising efforts will undoubtedly be closely scrutinized.In an ever-evolving landscape where innovation meets tradition, Tesla's foray into TV advertising underscores its willingness to adapt and evolve. Whether this bold move will pay off remains to be seen, but one thing is clear: Tesla is not afraid to challenge the status quo in its quest for automotive dominance.

Analysts dispute Elon Musk's claim about Tesla becoming bigger than Apple

Wall Street analysts have disputed Elon Musk's claim about Tesla Inc. becoming bigger than the combined valuation of Apple Inc. and Saudi Aramco one day, Bloomberg reported today.According to the Bloomberg article, the electric-vehicle maker reported lackluster third-quarter results on Wednesday, with revenue and margins missing estimates even as profit beat. This is the first time the company missed revenue estimates since the third quarter of 2021, data compiled by Bloomberg show. Chief Executive Officer Musk also said demand was a “little harder than it would otherwise be,” due to downturns in China and Europe.The results and the cautious stance on demand prompted multiple analysts to lower their price target on the company on Thursday. The average price target on the company stands at US$293, according to Bloomberg data, over 40 percent higher than the stock’s Thursday close. Tesla shares closed down 6.7 percent at US$207.28.“We remain cautious on valuation, particularly in the context of lofty unit volume growth expectations, and continue to see material downside risk to our December 2023 price target,” JPMorgan analyst Ryan Brinkman wrote in a note.Tesla, which was briefly a part of the trillion-dollar valuation group, currently has a market capitalisation of about US$650 billion. Apple has a US$2.3 trillion value, while Saudi Aramco’s stands at roughly US$2.1 trillion.As the US consumer gets squeezed between high inflation and rapidly rising interest rates, investors are keeping an eye on demand for discretionary items and big-ticket purchases like a car this earnings season. After Tesla earlier this month reported third-quarter deliveries below expectations, analysts and investors have been watching for any signs of cracks in demand.Risks to demand is an especially fraught concern for Tesla because of its rich valuation that is heavily dependent on the company’s future growth potential. Tesla’s stock trades at 49 times its forward earnings, compared to the S&P 500 Index’s 18 times.“Tesla stock is predicated on a growth-valuation framework, for which access to low-cost capital is a key input,” BofA analyst John Murphy wrote in a note to clients, adding that the shares may already be priced fairly, especially considering market volatility.Still, while valuation may be held back in the near term because of global economic turmoil, ongoing supply-chain and logistical problems, and high raw material prices, analysts largely maintained their longer-term bullish outlook for Tesla.“While Tesla is not insulated from a downturn, we believe its growth and margins could be much more resilient than the rest of the industry in a recession globally,” Deutsche Bank analyst Emmanuel Rosner said, even as he lowered the price target on the stock to US$355 from US$390.