Tesla Faces “Weird Transition” as Revenue Dips, Robotaxi Plans Shift

CEO Elon Musk Warns of Rough Quarters Ahead Amidst Shifting Market Dynamics

Tesla’s latest financial report revealed a significant revenue decline, prompting Elon Musk to caution investors about a challenging period. The electric vehicle giant experienced its steepest year-over-year revenue drop in over a decade, falling short of Wall Street’s projections, which sent shares down over 4% in after-hours trading.

Navigating an Uncertain Road Ahead

In a call with analysts, **Musk** described the current environment as a “weird transition period.” The company attributed its struggles to fluctuating tariffs, uncertain fiscal policy impacts, and shifting political sentiment. “Does that mean like we could have a few rough quarters? Yeah, we probably could have a few rough quarters,” **Musk** stated, acknowledging the headwinds from diminishing EV incentives and evolving autonomous vehicle regulations.

Despite the immediate concerns, **Musk** expressed optimism for the company’s long-term prospects. “I think Tesla’s economics will be very compelling by the end of next year,” he projected. Analysts, while noting the current financial dip, also see potential upsides. Thomas Monteiro, a senior analyst at Investing.com, suggested that the company’s efforts in markets like India and China could fuel recovery.

“Although still far from what fundamentals would suggest for a trillion-dollar company, Tesla’s latest numbers do spark some optimism, indicating that the worst is likely behind it — at least in terms of the core auto business.”

—Thomas Monteiro, Senior Analyst, Investing.com

Robotaxi Rollout with a Human Touch

Tesla is advancing its robotaxi ambitions with a phased approach. The company plans a quasi-robotaxi service in the San Francisco Bay Area, featuring a safety driver behind the wheel to expedite expansion while awaiting regulatory approval. This mirrors early strategies of competitors like Waymo.

Currently, human safety monitors are accompanying robotaxis in Austin, with service limited to select Tesla influencers and investors. **Musk** outlined ambitious timelines, aiming to expand the service within weeks. The purpose-built Cybercab, devoid of steering wheels or pedals, is slated for high-volume production in 2026.

Furthermore, Tesla owners may be able to contribute their personal vehicles to the robotaxi fleet “by next year.” **Musk** anticipates that Tesla’s autonomous ride-hailing service could eventually serve “probably half of the population of the US by the end of the year,” contingent on government approvals. This follows a history of **Musk** missing previous robotaxi deadlines.

Affordable Tesla Model to Resemble Model Y

The highly anticipated, more affordable Tesla model is expected to share a design similar to the Model Y. **Musk** indicated that public availability could begin in the fourth quarter of this year. Tesla’s earnings release confirmed that initial builds of this cost-effective model are planned for June, with mass production targeted for the latter half of 2025.

The concept of a lower-priced Tesla was initially proposed in 2020 during the company’s Battery Day event, with **Musk** envisioning a $25,000 vehicle, codenamed “Model 2.” However, the original three-year launch target has passed without the vehicle reaching consumers.

Musk’s Stakeholder Control Concerns

A notable concern for **Musk** is maintaining sufficient control over Tesla amidst potential shifts in his shareholding. He expressed apprehension about being “easily ousted by activist shareholders” if his stake diminishes, emphasizing the importance of retaining enough voting power to guide the company’s direction.

“I think my control over Tesla should be enough to ensure that it goes in a good direction,” **Musk** stated. “But not so much control that I can’t be thrown out if I go crazy.” This sentiment echoes his earlier public statements about needing approximately 25% voting control to remain influential while still allowing for accountability.

Tesla Remains Tight-Lipped on xAI Investment

When questioned about Tesla potentially investing in **Elon Musk**’s artificial intelligence company, xAI, Chief Financial Officer Vaibhav Taneja declined to comment, stating that the earnings call was “not the forum” for such discussions. However, **Musk** indicated openness to shareholder proposals on the matter.

“Shareholders are welcome to put forward any shareholder proposals that they’d like,” **Musk** said. “I recently encouraged that, and then have shareholders vote and will act in accordance with the shareholder wishes.” **Musk** has previously expressed reservations about merging xAI with Tesla but plans to allow shareholders to vote on an investment in the AI company this November.

Critics, like Kevin Thomas, CEO of the Shareholder Association for Research and Education, have voiced concerns about the governance implications. “If this were a merger decision, at least we’d be looking at a single entity, where that company’s CEO could justifiably decide where to allocate resources between its divisions,” Thomas remarked. “Is it too much to ask Tesla’s CEO to work for Tesla first and foremost?”