Tesla WTF
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Audio Recording by George Hahn
The most impressive, and unimpressive, product displays of 2024 occurred last week — from companies headed by the same person. The largest booster rocket ever assembled was called back to terra by gravity; then, as it approached the Earth’s surface, engines ignited that navigated the projectile into a metal cradle. SpaceX’s 20-story booster rocket catch was nothing short of remarkable. But four days before, analysts were summoned to a product launch that (essentially) didn’t happen.
I know a woman who was engaged to a celebrity chef who, after 300 guests had assembled at a Caribbean resort, was a no-show (no joke) at their wedding. Tesla’s Cybercab was a no-show at its premiere. Specifically, there were no details that gave any analyst or onlooker much insight into the product or any idea when the rubber will meet the road.
Why was the Cybercab a no-show? In the past two years, CEOs have added trillions to their businesses’ valuations with two letters: AI. Over the last decade, Tesla has sustained its position as the world’s most valuable car company with a one-word claim: autonomous. Tesla’s We, Robot event was a head fake that didn’t fool the market, which promptly trimmed $60 billion from the company’s market cap.
Overvalued
At its peak in 2019, WeWork was valued at $47 billion. Four years later, the co-working company was worth $44 million. In between those two valuations, investors rejected Adam Neumann’s narrative that the business was a tech company and came to see WeWork for what it was — a poorly run real estate play. Tesla is a great company with positive cash flows. However, like Adam Neuman, Musk keeps spewing adjectives and embellishments that have worn thin.
In April, Tesla’s operating profit dropped 50%. This should’ve sent the stock down, but Musk pulled off another mid-air catch. On the earnings call, he said, “We should be thought of as an AI robotics company. If you value Tesla as just an auto company, it’s just the wrong framework.” Then he added, “If somebody doesn’t believe that Tesla is going to solve autonomy, I think they should not be an investor in the company.” The stock rose 14%. Spoiler alert: Tesla is a car company. Automotive is Tesla’s core business, accounting for 94% of last year’s revenue. There is a dangerous belief in the U.S. that if you repeat a lie long enough, it will become less of a lie. The election wasn’t stolen, and Tesla is not a software/energy/AI/autonomous firm, but a great car company that is wildly overvalued. (Note: Not financial advice — I consistently get it wrong on Tesla.)
Hybrids
I used to own a Tesla Falcon Model X. It’s a great car from a great brand. Early adopters signaled to the world that they cared about the environment and were rich. Which is a feature that commands margin: being more desirable to potential mates … or less undesirable. At the moment, however, hybrids appear to be the bridge to a future thought to be electric. Internal combustion autos still account for 81% of new car sales in the U.S., and hybrids are selling 5X faster than EVs in 2024.
Range anxiety and charging concerns are limiting EV sales. One consumer survey found that 80% of those considering an EV for their next car believe the current charging availability is insufficient, while 70% of current EV owners say they’re dissatisfied with the current infrastructure. That’s bad news for the EV brand, but potentially good news for Tesla, as its charging infrastructure is excellent. However, Musk’s plan to make Tesla charging the industry standard and open its charging stations to all EVs have not materialized.
Another significant factor is price, as hybrids in the U.S., on average, cost $14,884 less than EVs. As EVs attempt to expand beyond early adopters to the mass market, price becomes more important — as the middle of the pyramid is much more price conscious. For the first time since the pandemic, Tesla saw its sales drop 13% in the first quarter and 9% in the second. Sales rebounded 9% in the third quarter, but the news across the EV sector suggests the category is slowing. Ford is scaling back its EV rollout. General Motors is delaying its electric truck and reducing investments in EV battery mining. Volvo is walking back its 2030 all-electric target. The EV revolution isn’t over, but Toyota CEO Akio Toyoda was right about its pace. Toyota bet on hybrids, and this year that paid off with a 66% jump in U.S. hybrid sales.
China
In China, though, EVs will account for 45% of new car sales this year. A growing EV pie is good news for a pure-play EV company. But BYD, the No. 1 Chinese EV manufacturer, offers cars at considerably lower prices than Tesla. The BYD Seagull sells for $9,700 and the Yuan Plus costs $16,600; a Tesla Model 3 starts at $34,000, and the Model Y costs $37,000. China also has 200 domestic EV manufacturers fighting for the EV Iron Throne. The CCP has made clear that it intends to win the EV future via competition.
Mass Distraction
The main attraction at Tesla’s We, Robot event was supposed to be the Cybercab, a two-seat, fully autonomous vehicle that’s long been central to justifying Tesla’s gravity-defying valuation. Unlike the Cybertruck, which looks like John DeLorean dropped acid with Homer Simpson and designed a life-size version of the vehicle from the ’80s arcade game Moon Patrol (google it), the Cybercab actually looks cool. Supposedly, it’ll enter production by 2026, or, as Musk jokes, “before 2027.” The Cybercab will sell for under $30,000, but Musk didn’t offer any details, as financials are a buzzkill. Also, we have no idea whether the self-driving technology will meet regulatory safety standards. Today, there was news that the main U.S. auto safety regulator said it was investigating Tesla’s self-driving system. Latin for, this tech is not ready for prime-time. But don’t worry. For the past decade, Musk has been predicting that autonomous driving is just around the corner.
Meanwhile, back on Earth, Tesla has only achieved Level 2 autonomy (a driver is still required). The Waymo self-driving taxi, which looks like a science fair project, has Level 4 autonomy (no driver needed), and is already providing 100,000 paid rides per week in Austin, Los Angeles, Phoenix, and San Francisco. Unlike Tesla, which is trying to go vertical, Waymo wants to be the OS for autonomous driving. The company is working with multiple auto manufacturers, including Fiat Chrysler, Hyundai, and Volvo. My prediction: Waymo’s tech coupled with several brands at different price points will bring autonomous to the masses, not Tesla. In L.A. last week, I experienced my first Waymo ride. It drives just how I’m hoping my 17-year-old drives, overly cautious. However, when we encountered an accident, with flares, cones, and a cop with a luminant baton, redirecting traffic into the wrong side of the road to pass the damaged vehicle, Waymo was intimidated. But it figured it out, which I found remarkable. The millions of (unexpected) data points collected, digested, and then acted on is staggering.
Glorious Future
Musk believes the Cybercab is going to usher in a “glorious future.” Maybe his claim that entrepreneurs will manage a Cybercab fleet “like a shepherd tends their flock” will become a reality. Maybe a future where Cybercabs are constantly on the move will enable city planners to turn parking lots into parks. If that day comes, maybe Cathie Woods, who believes Tesla will create $8 trillion in enterprise value by 2029 as a robotaxi business, will look like Warren Buffet. But at the moment she appears to be the Tesla of hedge fund managers, overpromising and underdelivering with inane hyperbole.
Robovan
My Pivot co-host Kara Swisher called the Tesla Robovan a “toaster on wheels.” But Kara also drives a Kia Sorento, which puts an asterisk next to any view she might have on cars. My take: despite Musk insisting that they will build it, the Robovan is a concept car that has almost no chance of ever being street legal. And Tesla knows this, but autonomous was a no-show at the wedding, and the bride (Musk) needed something to get everyone to look away from the embarrassing situation in front of them.
Peter Drucker advised business leaders to focus on your opportunities, not your problems. And Musk is doing this. SpaceX is ascending, Tesla is falling to Earth. This was obvious at the event, as Musk seemed unrehearsed, confused, and stumbled over his words. BTW, the most impressive person in tech you’ve likely never heard of is Gwynne Shotwell, COO of SpaceX.
Optimus WTF
Musk pitched the Optimus robot as a personal R2-D2 or C-3PO that can be a teacher, babysitter, dog walker, gardener, or companion. “Whatever you can think of, it will do,” Well, I can think of it actually being a robot that has autonomous capabilities. At the event, Optimus robots served as bartenders and chatted with the crowd, which sounds amazing, until you realize that they were controlled by human operators.
Supposedly, the robots will cost somewhere between $20,000 and $30,000 (human operator not included). That’s $12,000 less than a new Tesla Model 3. But a Tesla is a product that solves a real problem — offering personal transportation without burning fossil fuel. Even if Optimus could do half the things Musk claims it can, who’s going to buy one? Tesla can’t answer that question, but neither can Boston Dynamics. Their Atlas robot requires human oversight, just like Optimus. But after more than a decade of R&D and support from the Defense Department’s DARPA program, Boston Dynamics still doesn’t have a commercial strategy for Atlas, though it has produced some great YouTube videos. This entire category defines the concept of a technology in search of a use case. However, while it may never be able to watch your kids, Optimus did provide a purposeful distraction from the introduction of a product that is not ready and (once ready) will be inferior to products already in the market.
Pants-on-Fire Mode
Entrepreneur is a synonym for salesperson, and salesperson is the pedestrian term for storyteller. Pro tip: No startup makes sense. We (entrepreneurs) are all impostors who must deploy a fiction (a story) that captures the imagination and attracts capital to pull the future forward and turn rhyme into reason. No business I have started, at the moment of inception, made any sense … until it did. Or didn’t. The only way to predict the future is to make it.
This is not the same as lying. There’s a real distinction between an entrepreneur and a liar: Entrepreneurs believe their story will come true, as they are laser-focused on making it true. A liar, well, they know they’re misleading people with false data. Usually for money (i.e., fraud). This is where Tesla turns gray. Here’s what I see:
- In 2015, Tesla was two years away from a 1,000-kilometer range … a decade later it’s closer to 600 km.
- In 2016, coast-to-coast autonomous driving was two years away.
- In 2019, Tesla said it would have 1 million self-driving cars (that wouldn’t require any human oversight) on the road by mid-2020.
- Also in 2019, robotaxis were one year away … until last week, when we were told robotaxis were two years away.
I believe this is the year the market looks at Tesla and sees what I see: a great car company that is a car company.
Life is so rich,
P.S. Raging Moderates is a new podcast from Prof G Media. Every Tuesday I discuss the latest political news through a centrist lens with Jessica Tarlov, co-host of The Five on Fox News. Follow us here on Apple or here on Spotify. Or subscribe here on YouTube.
P.P.S. The AI hype keeps growing, but don’t build an AI product just to have one. The Section team is giving you a free playbook for picking actual high-value AI applications for your company and scaling them. It’s running on October 29 — take the free advice.
Scott, the way you and Kara constantly dunk on Elon suggests that you no longer hold objective views. It has become personal. The guy is at the forefront of modern technology. He is literally creating the reality distortion field. His contribution to humanity is immense. You and Kara need to pump your brakes. Sure, he is weird. That comes with the territory.
A few additional points. Elon has claimed that with full autonomous driving, every Tesla owner can use their vehicle as a Robotaxi, generating $30,000 a year. There was no mention of how this new Robotaxi was to compete with his every-Tesla-is-a-Robotaxi strategy. Did he just concede that he lied about every one of his cars becoming a Robotaxi? Secondly, he didn’t explain why Tesla doesn’t focus on existing product problems. The Cybertruck has been a bate and switch which needs a lot of attention if it is not to become the criminal part of Elon’s constant stock manipulation; like things paid for but not delivered – driver assist, headlamps, promised range, promised towing capacity, non damaging wheel covers – as well as cheap materials, and poor build quality.You allude to the most fundamental problem with all of Elon’s enterprises: The CEO of SpaceX. Elon doesn’t do anything. He has brilliant employees who do everything. He’s not an engineer, a rocket scientist, a neurobiologist, a network engineer, a solar anything, and certainly not a traffic engineer. He’s a fantasist without Board constraints, constantly making the brains at Tesla run after his latest head fake before they’ve fixed the last one. He simply takes credit for their success and ignores his failures.
**bait** not bate, though one could argue the Cybertruck is mostly Elon’s self abuse.
I am a Duke MBA who happens to also be a dentist. I look at company fundamentals and am critical as well. Thank you for not being afraid of speaking your truth with no holds barred. It is refreshing and brutally honest. I look forward to your articles and love them. Thank you for saying what needs to be said!!
Ben Thompson and Stratechery just did a great analysis explaining the Tesla bull case. Your critique sounds like the 2013 Singapore Satellite Industry forum video cited in his article. The “experts” called reusable rockets and Elon’s claim for $7m rockets a “dream”. Fast forward 11 years and the “dream” is becoming a reality. Same man, selling a different but similar dream.
Also, Waymo relies on LiDAR; LiDAR is expensive and a constraint to scale; this is why Tesla made the contrarian decision to rely on cameras—much harder but if solved, huge unlock. Waymo’s latest version costs $200k and might be stuck at level 4 autonomy. Tesla has “waymo” training data in the field and cameras might be the only way to level 5. If anyone can solve this problem, it’s a team led by Elon—his stories don’t just inspire investors.
There is no “team led by Elon”. Elon does nothing. Not an engineer, designer, rocket scientist, network engineer or traffic guru. He’s a blowhard who takes credit for others’ accomplishments while pretending his failures never happened. He gets away with it because he doesn’t care if he lies, and neither do his investors.
If you have an EV and drive the typical travel day, you don’t need any “EV infrastructure”, it’s at your house. You don’t stop for 5 mins ever, at any gas station. And you can do 200 – 300 miles a day of that type of driving, when most go 35 miles on a regular day. Taking an EV on a road trip is a challenge, and you could easily rent a car for the few “road trips” most people take. 60,000 miles and new unchanged brake pads, no oil changes, and FREE day to day driving, if you have solar panels. People who doubt EV have never had one, live in an apartment, or travel more than 200 miles a day, which applies to nearly no one.
And by the way, the price of a used EV is incredible, compared to a similar mileage gas car, and with nearly zero maintenance and gas costs.
Musk proved one thing at Trump’s rally: White men can’t jump.
You forgot. Musk is an asshole.
Tesla’s problem seems to be that the CEO is hugely distracted seeking relevance elsewhere.
On humanoid robots, i was puzzled to read you don’t see a use case to commercialise the tech. Assuming, these things get good at what humans do at a cost of 30k, there should be a rather quick 1:1 replacement in many factories as it allows to automate labour at a rapid pace within an existing set of processes and infrastructure. I would expect, each unit to be capable of redeployment across different tasks, making this tech very flexible in its application vs other large scale capex tech investments. There are of course issues with this approach however at this pricepoint, small businesses can embark on automation at scale, which currently seems elusive.
Additionally, as residential aged care becomes more and more unaffordable and labour shortages in this sector are already today a big issue, humanoid support will allow the elderly to stay much longer in their own or their family’s home. I for one would instantly buy one for my parents to lend them a hand as well as provide them with a point of daily interaction to keep their minds active.
If Elon would stick to cars and rockets, perhaps he could achieve a few more of these lofty goals. However, his foray into social media has the potential to derail both if he’s not careful.
“Twitter is both a social media company and a crime scene”
@elonmusk. · Dec 10, 2022.
Imagine if some person just bought Google and all of a sudden had access to everyone’s gmails, gchats, google docs, google calendar, ect, ect, ect.
I wonder how many crimes would be in all of those documents.
I wonder how much criminal activity is in Twitter’s DM and other Twitter locations.
Musk purchases Twitter and then changes name and url to X
Twitter X’d out. I wonder if that was a signal.
X then moves across state lines and out of California and into Texas.
I wonder what Musk’s long term strategy is with his multi billion dollar crime scene now that it’s in a red state jurisdiction.
I’ve been making money by buying and selling TSDD , a leveraged short of Tesla stock.
“I used to own a Tesla Falcon Model X. It’s a great car from a great brand.”
What?!
HA, HA, HA, HA, HA, HA ,(snort) ha, ha, ha, ha (cough, cough) ha, ha, ha….
Oh my Lord, that just made my day.
No wonder you hate Musk so much.
I would be pretty pissed if I spent that much for a stupid car.
It reminds me of a meme about Musk watching all the Twitter employees he just fired driving home in Teslas.
Not only is Musk living rent free in your head but you actually spent somewhere around $77K-$96K for one of his cars.
A stupid, ugly car that takes 6 hours to charge.
Ha, ha, ha, ha, ha
Well written and witty. I frequently remind myself that not everyone at Tesla supports a serial adulter/putin loving/election denying clown with hair implants. (Guess which one!)
I disagree totally with every paragraph of this post. Anti Musk ideology makes people blind.
Previsions are not lies.
Musk is an American hero.
No Mercy/Extra Malice should be the title of this BLOG post. The results will be the final arbiter of team Tesla’s success. Swinging for the fences when everyone tells you to just try to make contact is not easy, and is a risky strategy, sounds ambitious and American to me. If the leadership’s vision is beyond achievable it typically fails to muster enough buy in by all the talent necessary to achieve it, that doesn’t seem to be a problem. While Tesla may be having its analog to the Metaverse period now, the longer-term track record of the Tesla team and all its leaders is not one of complete failure nor is it middle of the pack results. Exciting times, big exciting goals, we shall see what types of results this ends up producing in the end. If team Tesla comes close to their expectations, the results will offer many net benefits to society that on balance seem overwhelmingly positive. I will continue to root for the underdog here!
How are Tesla the underdog? They are worth more than the entire global auto industry combined.
The email version had me tripping with a mix of font colors that had me wondering whether my vision is at its optimum.
However the read was amazing and I agree with you on most of the points raised and maybe the world will come to see Tesla for what it is. I also think a gentleman in the comments might be right on Tesla being a charging network selling cars as a side hustle. Musk might be revolutionary in the space travel segment but the in the automotive sector truth is catching up with him.
Poor Scott! Never mix politics with business. Your obsessive TDS jihad has made your weekly musings more akin to Peggy Noonan than Charlie Munger.
If Musk was stump thumping for Harris and not Trump you would be singing his praises.
Dear Professor G:
I love your newsletter and views. The fact that you let people comment is very brave. I have had a Tesla for 10 years and have driven over 140,000 miles. I think the charging net work is the biggest asset Tesla has. It is the stepchild of Tesla but should be the leading valuation. The old adage “give them the razor and sell them the blades” applies. Tesla is a charging company that happens to sell cars. I have found plenty of chargers and always find new ones. They are convenient and usually available. Much better than gas stations. The reluctance to buy a EV is often the result of the other charging stations. Tesla chargers are a big advantage. If you look at the growth of EVs and not the market share here now,… it is phenomenal.
I would like to see one of your charts on valuation of the charging system for Tesla as opposed to the car sales. Also I would like to see the impact on the stock valuation by Elon’s weird political moves. X and Trump backing is ruining the brand.
Mike Zappas
Atascadero, CA
WOW – Scott, really….Tesla WTF?
I agree with you on some of the points you make in your article. Musk has made some statements that need to be brought to market fruition or retracted and take the valuation hit. Comparing Tesla to Chinese EV brands isn’t even in the same reality realm….a Communist market place….come on.
Where’s the US investment into the EV…you cited; “70% of current EV owners say they’re dissatisfied with the current infrastructure.” The Biden/Harris regime promised $1B investment and to date have sputtered along with only two, underwhelming electric outlets.
I’m sure part of your anguish and ridicule about Telsa is less about issues of under delivered promises and more about Musk’s leanings ($70m) toward a presidential candidate you find utterly atrocious.
Maybe we should be a little more tolerant and get behind the Team US than yelling & jeering from the stands at those on field pushing science and technology forward….time to cite someone and pass the mic.
“It is not the critic who counts; not the man who points out how the strong man stumbles,
or the doer of deeds could have done the better. The credit belongs to the man who is actually
in the arena….if he fails, at least fails while daring greatly.” – Theodore Roosevelt
You said “The most impressive, and unimpressive, product displays of 2024 occurred last week — from companies headed by the same person”
You DO know that Gwen Shotwell is the CEO of SpaceX, NOT Elon Musk.
And I might add the ONLY company founded by ELON that KEEPS innovating.
While Elon’s companies HAVE done some amazing things, he has NO regard for the truth.
His companies blow by targets for product releases more than anyone.
I believe his shelf life for that kind of thing is just about over.
“Fake it till you make it” doesn’t flush anymore.
He used to be our Tony Stark.
Not so much anymore.
You are correct that Tesla is a great car, I’ve had a model S since just after it first came out. But Tesla is a terrible car company, where customer service is either a rumor or a joke. Founders shouldn’t be managers, and Tesla is exhibit A. SpaceX is a great company because it has only one customer, the US government, that doesn’t require real customer service. Hype is a great market influence, but so is gravity.
Starlink?
Unfortunately you put a “target” on Gwen Shotwell’s back. Like Trump, I suspect Musk hates when people under him get praise and attention, especially when he gets rightfully hammered.
Also, what happens when Waymo partners with Toyota for use in their hybrid tech in their autonomous driving platform? Tesla will be stuck with the EV platform.
Is there any doubt why Musk is so desperate to get Trump into office? Musk (Tesla) most likely will need a big bailout in the coming years (once valuations become more reasonable) and one can bet that Trump has already promised that to him. Moreover, Musk will need huge funds for SpaceX to ready his effort for going to Mars. Musk is rich, but not that rich!
It’s hard to tell the truth about the future but his (untrue) story about the future made everyone else change their story.
He definitely is making the future
..by making everyone else make it for him.
Life IS so rich but still brutish and short
Reading Scott’s Tesla hit piece reminds me of Steve Ballmer’s assertion that “There’s no chance that the iPhone is going to get any significant market share”
Hello Scott…..this is the best description in common sense language on how new things get to be completed….Well Done!!!
Entrepreneur is a synonym for salesperson, and salesperson is the pedestrian term for storyteller. Pro tip: No startup makes sense. We (entrepreneurs) are all impostors who must deploy a fiction (a story) that captures the imagination and attracts capital to pull the future forward and turn rhyme into reason
Your snark about Elon’s Spacex & Tesla accomplishments are clouded by your dislike of his politics. Views & opinions on X – pro & con – overwhelm the mainstream media. It’s another transformative success story – upsetting the the media& deep state plan
Exactly…. I read Scott because many of his views don’t jive with mine, but it’s useful to listen to other people’s opinions. Scott has become a Elon and Tesla hater the minute he backed Trump – the end. What Musk has done (not always right the 1st time) is unprecedented. If Musk came out for KM. Scott would fawn all over him!
I read Scott Galloway to understand what is writing posts driven by ideology and invent facts in order to match the ideology.
Give me a break!
Give me a break. What BS. Especially the media& deep state plan mention.
When does a CEO making false promises year after year after year cross the line into market manipulation?
When investors stop buying into the promises
I think this analysis is spot on in many ways. However, the market frequently and routinely misprices things. 5 years ago Nvidia was priced as a gaming chip company with crypto miners and auto OEMs rising. The application of its domain expertise created a fundamental re-architecting of compute. Tesla seems positioned from a data point of view and core competencies point of view to leverage car manufacturing into new transportation paradigms.
Tesla is not a great car company. Having driven several EV options of late, Tesla is average at best, enhancing features that provide no real utility (crazy high acceleration and electrically automated everything are bugs, not features for general transportation and energy efficiency) and fairly poor software and Human-machine interfaces. I hammered on the e-brake in a Telsa after mistaking it for the wipers… Left stalk, not right one…silly me.
If analyzed by Motor Trend or Road & Track on their car-making chops, Tesla would be mid-pack at best, and at worst – a company (and “CEO”) that is a lying shill like Scott suggests. If Ford/GM or otherwise did half the crap they did, they’d be seeking another government bailout. Tesla on the other hand gets their government bailouts front-loaded…
I am in the phony wellness business which is very unwell. Pilates which is real is growing, but all the others are just trying to rebrand as “science” and “health” which is their AI version. Diet and exercise has always been about appearances. Eating is pleasure not nutrition.
Comparing Adam Neumann to Elon Musk? 🤔
These days? Totally.