A Robotaxi May Not Be Enough To Solve Tesla's Mounting Issues

Amber DaSilva
Tue, May 14, 2024

Screenshot: Tradingview, Photo: Apu Gomes/Getty Images


2024 has been a very bad year for Tesla so far. We’ve all read about the layoffs, the poor sales, and the deeply weird earnings call, but a closer look reveals even more behind the scenes. It’s about who is being laid off, why sales are down, and whether what Musk said on that call might be signaling his exit from Tesla entirely.

A viral Twitter thread from user Zero Sum Bond looked into just how bad the circumstances at Tesla are, declaring that the “walls are starting to close in” on the automaker. While the thread isn’t entirely accurate — tweets about Tesla keeping two separate copies of its books to fool regulators are only backed up by a suit that’s since been dismissed for lack of evidence — it’s a convenient compilation of some of Tesla’s biggest misses in recent months.



First on the agenda for Zero Sum Bond is the steady loss of many of Tesla’s top folks. A lot of folks have been wrapped up in the sweeping layoffs at the company, like Daniel Ho and Rebecca Tinucci, but others have left of their own accord — most notably HR head Allie Arebalo. Still others, like Cybertruck manufacturing head Renjie Zhu, left the company for reasons that are still unclear and we don’t know who made the call.

What’s more interesting than those who left, though, is what they did on the way out. People who were recently either restructured at or removed from high-level positions at Tesla are unloading their shares, like former CFO Zach Kirkhorn or now-former Musk right-hand-man Tom Zhu. Zhu, who is still employed at Tesla, holds fewer shares now than he did a year ago — despite thousands of shares awarded as compensation. Whatever’s going on behind the scenes, it’s possible it’s making even the inner circle lose faith.

Tesla is even going back on some of those layoffs, rehiring parts of the Supercharger team just weeks after gutting it. The move shows disorganization at the top, a shoot-from-the-hip mentality that seems incongruous with a company valued at $538.6 billion.



That valuation, of course, isn’t really matched by Tesla’s actual business. The company missed revenue and earnings per share targets last quarter, as it did for the two quarters prior. Softening EV demand is part of the issue, but Tesla has steadily dropped prices and market share at once — competition from more established automakers is simply getting tougher for the company to battle.

Tesla’s outdated inventory, save the new and issue-prone Cybertruck, certainly isn’t helping. Tesla sells some of the oldest new cars you can buy, which is a wonder in a world where even Toyota is changing the platform beneath the 4Runner. The faithful will tell you that Tesla is constantly iterating, always improving beneath the cars’ skin, but that’s a line that only works on the faithful — your average commuter sees a new car on the lot that looks nearly identical to one from ten years ago.

Tesla also has fewer avenues to hide its missteps. Traditional automakers can force cars down dealers’ throats in a move called channel stuffing, an unethical practice that shifts vehicles off the OEM’s books and tells local retailers to deal with it themselves. Automakers have been known to hide bad quarters through this method — Triumph once lost a CEO over the practice — but it’s not an option Tesla can use to sweeten its books. Not that it should, of course.

This, of course, is all before the myriad litigation Tesla faces over its semi-autonomous driver assist software. FSD and Autopilot are being investigated by the Justice Department for fraud, due to the implication of self-driving when the software truly can’t, while NHTSA is probing just how bad the systems really are, and whether mandatory recalls actually made as much of a difference as they promised to.

Yet, this software is what’s supposed to save Tesla: Musk himself said, “If someone doesn’t think Tesla’s gonna solve autonomy, I don’t think they should be an investor in the company.” The robotaxi project is the company’s new north star, and Musk believes it’ll be enough to save the company from its financial dire straits. Maybe he’ll open up another preorder round this August, hoping for some real money for nothing.

Sketchy software and vaporware promises may be enough to save a fledgling startup, but Tesla hasn’t been that kind of company for years. It’s the most valued automaker in the world, nearly doubling the market cap of Toyota. Tesla has had years to prepare itself for stronger competition, but it spent that time resting on its laurels and making fart jokes. Now, it seems, the market is finally realizing Tesla may be wearing nothing at all.

Tesla needs to focus more on 'car company problems': Analyst

Madison Mills and Seana Smith
Tue, May 14, 2024



Tesla (TSLA) is rehiring back some of its Supercharger team which were laid off last month, according to Bloomberg. This comes after CEO Elon Musk posted on X (formerly Twitter) that the EV maker was all in on expanding its Supercharger network with an investment of over $500 million in spite of headcount reductions and recent executive departures.

ROTH Capital Senior Research Analyst Craig Irwin sits down with Catalysts to talk about Tesla's Supercharger road map and which areas the auto company should be prioritizing.

They got to show they can they can get growth going again right? When you decline 7 or 8% you've got to actually show that you can get to positive growth again. That's not particularly easy. They're going to have to cut price, they're going to have to be aggressive," Irwin states. "And they're going to have to lay out a path to the mini car, the cyber taxi, robotaxi, whatever it's going to be. Where's the growth going to come from? they've got a lot of work to do with investors."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Luke Carberry Mogan.
Video Transcript

Hiring back some of its recently laid off supercharging team.

That's according to reporting from Bloomberg, this comes after the maker laid off 10% of its global workforce last month, including some of the charging team members break down what this means for the company.

We've got Craig or when Rock Capital, senior research analyst, Craig, thanks for in studio, we appreciate it.

So I wanna just start on the U turning that we've seen here.

What do you make of this pivot back for Elon Musk?

Yeah.

You know, he, he tends to make kind of absolutist uh decisions and then uh vacillate around like oops, right?

So they have a capital program they need to execute on um you know, deliveries might not be the trajectory they plan for or hope for this year.

Um But there's a lot of money that's been invested in expanding the supercharger network.

And you know, they're basically gonna be giving a big gift away to industry unless they execute on supporting customers like WW et cetera with, with their build out plans.

Do you think they will be able to do that?

They can definitely, they have the capital, they have the capability.

Um They've spent the money, you know, they need to have the staff there to support the, the completion of these, of these projects.

Is there any headwind for Tesla though, on the likes of BP, who had tried to kind of sniff around the real estate that they had potentially given up and now Tesla's back or is BP?

Just so the, the headwinds for Tesla haven't, haven't really been discussed a whole lot in the charging side.

So Tesla was denied from the direct procurement in New York State.

And there have been several other instances where they've had zero share in some of the nev money.

So Mr Musk has made some uh political mistakes in the way.

He's uh been out there fairly aggressive with rhetoric and it's come back to bite him on the capital access side or the, the, the support side uh for the growth of his ev charging network.

I'm sure that's driving his frustration with the business, but you know, Tesla is a great company.

They have the best network out there.

It's gonna stay the best if they don't invest any more dollars right now for a while.

Um But it's, it makes economic sense for them to bring people back.

Craig just more broadly speaking right now, the next couple of months for Tesla, what is that going to look like?

Because it seems like you, it's nothing new when it comes to Musk.

Obviously, he's a man of making headlines.

I think if you are invested in the stock, you're pretty used to some of the turmoil that has played out over the last several months, several quarters, early several years.

But the next couple of months could potentially be critical here when we're talking about the fact that obviously inflation is still a real issue in the middle of a pricing war.

You have lots of questions just about sluggish demand.

So where does that then position Tesla?

So they gotta show they can, they can get growth going again, right?

When you decline 7 8% you've got to actually show that you can get to positive growth again.

You know, that's not particularly easy.

They're gonna have to cut price, they're gonna have to be aggressive.

Um and they're gonna have to lay out a path to the mini car, the Cyber taxi, Robo, taxi, whatever it's gonna be.

Where's the growth gonna come from?

They, they've got a lot of work to do with investors.

How much, how much do you, you just said that they're gonna have to lower prices again by how much I wouldn't be surprised to see another cumulative 20% price cuts in the next year.

And what kind of pressure is that gonna put on margin, margin, margin will keep going down?

I mean, I don't think margins are going up anytime soon, right?

They're gonna need, they're gonna need another vehicle platform to actually start driving margins again.

They're gonna have to innovate their way out of this mess.

They have car company problems and tech company aspirations and they need to focus on being a car company and solving the car company problems.

Well, then what product do they need to come first?

What would potentially be a saving day for Tesla right now?

So the one they should have launched literally four or five years ago is the mini car, right?

If they'd have launched it, the supply chain would be in place for them to have, you know, mid to high teens margins, right?

They could have been building it in Germany or in India and they're just late and this vacillation around where and when obviously Tesla, Tesla decided that that um Texas is not the location.

That makes sense, right?

Texas is not where you want to build a small car that's really best sold in Europe.

You want to build it in Europe or you want to build it into another market like in India that will supply in um you know, there are so many problems they have to fix at Tesla right now for them to be going through um significant 10 to 20% head pound cuts right now is is problematic.

They need their best people working hard.