Investing

Tesla is A Train Wreck

Austin Smith

Published: April 19, 2024 6:10 am

Tesla Is at a 52 week low, and it looks like a train wreck. The company’s last holy grail is an autonomous vehicle that excites investors, but given the empty autonomy promises so far it’s hard to take those promises too seriously. A substantially improved battery my help, but that could be years away. In the meantime, Elon Musk and Tesla must survive.

Transcript: 

This is Doug McIntyre, the editor-in-chief of 24-7 Wall Street.
I’m in New York, and I’ve got Lee Jackson, who’s been with us almost two decades, a senior editor of public companies, finance, commodities, pretty much anything that has to do with things you can invest in, in Louisiana.
Hello from New Orleans, actually.
Yep.
So, Tesla… is the most over-covered, over-talked about, over-sold, over-bought stock maybe in history.
So here we are.
We’re at a 52-week low.
You’ve got a lot of guys who are very bullish on this stock, taking their price targets down.
Sometimes they’re moving it from an out-performed to a market-performed.
You know, not the kind of stuff you’d see ever.
So where does that put Tesla now with investors?
Let’s leave aside some of the details of what’s happened over there.
What’s the sentiment right now?
I think the long term Tesla bulls. if they sold a couple of years ago, they certainly can say they were right.
But I mean, everything about the EV industry has been on a downhill slope for like the last year.
And, you know, Ford was like, well, trade in your Tesla and we’ll give you a deal on ours.
And like, I don’t think people are flocking to Ford to buy theirs either.
I think that the industry as a whole has hit a wall.
And since Tesla was the standard bearer for the industry, they’re going to get hit the hardest.
Now, they laid off 10% or more of their staff.
They said 10% or more, which means it could be 15.
But that’s several tens of thousands of people.
Usually a company doesn’t do that if they’re looking for a rebound in the next quarter or two.
Not that I’m aware of.
I think that Musk said either yesterday or a couple of days ago when this started to filter out on the big layoffs that typically every five years or so we have to reset and restructure a little bit.
I’m like, okay, I guess that’s the case and slash pricing.
I think one of the things that’s happened in the last really week or two is is that people are not trusting what Musk says is next for Tesla.
He’s very often said, we’ve got a truck coming.
We’ve got a truck.
Eventually the truck made it.
Our autonomous driving feature will actually drive without a human there.
You know, there’ve been a few accidents, whether they’re Tesla’s fault or the driver’s fault, there’s skepticism about self-driving.
Now he’s, basically asking people to wait until August 6th when he introduces a robo-tax.
Do you think that, I mean, it doesn’t seem like he’s buying any investing friends there, but do you think he will?
Well, you know, this has always been kind of his MO and, you know, the guy’s a genius and everybody knows that, but I think he can’t fight the momentum of, against the industry and these new ridiculous government standards for EVs.
I was reading recently, they want all, you know, most of the commerce and transportation of goods in the United States is via the trucking industry.
And they want EV 18 wheelers, which are going to weigh so much that they’ll have less capacity because they’ll have to be smaller so they don’t destroy the roads.
So I think the combination of the sector hitting the wall, plus the ridiculous standards that they think they’re going to hit by, say, 2032, are all just a whirl of kind of sturm und drang for the industry.
Well, what I’m going to say right now is an aside, but I saw a guy in the battery business before Congress about three weeks ago.
And he wanted to start a charging station for 18-wheeler EVs.
He went to the city where he wanted to put this thing in, medium-sized city, probably 50,000 people.
And the city council said, you don’t understand something.
Your facility will use more electricity than our entire city does.
Indeed, I saw something very similar to that.
Yeah, you could drain a city’s electricity trying to charge EV trucks.
Right, which means in some ways that if you were to get the EV count, the car count, four or five times what it is right now, you’d have a grid local electricity utility problem.
And I don’t think people talk about that much because it’s fairly far in the future, but it’s still going to be a big problem.
Yeah, and again, the 18-wheeler EV will get about 185 miles to the charge.
Right.
Can you imagine having to take an 18 wheeler and every 115, 150 miles, you’ve got to go in and charge it for four hours.
And like you said, the way it’ll tap local grids, you know, if you’re in a smaller, I guess if you’re in New York or Los Angeles or Chicago, you’re not going to tap that grid.
But if you’re in any smaller town, that won’t work.
So I’m going to say it’s a given right now that whether the EV business in the United States is really good or not, Musk still holds 51% share here.
And, you know, does it go up or down?
I don’t know.
He does okay in China, BYD and some of the locals, you know, control that.
Eventually the Chinese, BYD, they’ll eventually get into the U.S. and European market.
It’ll take probably years of head-battering against tariffs.
But the holy grail for Tesla now has moved from an electric vehicle to an autonomous vehicle.
So I think, don’t you, that for the stock to take another surge, they have to be able to prove that they have an autonomous vehicle, that it works under all circumstances.
Yeah, I think that’s it because…
You know, there’s just not enough interest by the public to keep retail buyers of $80,000 to whatever the low end now is the 45 or whatever.
There’s just not enough buyers.
So he has to have something else come through or some battery breakthrough that are lighter and longer lasting.
Or, yeah, I mean, the stock is probably going to trade up and down on whatever he’s saying.
Like you said, in August, what… trade up and down on new news.
But there is a chance that a substantially improved battery and real honest to God autonomous vehicles, they could be a couple of years away, both those things.
Yeah, and I think that and there’s a for light autonomous vehicles.
Think of delivery, you know, alone pizzas and food and, you know, a million other items that people want.
I mean, there is a big market there.
There is a huge market there.
And that is probably something that Musk is going to try to build smaller vehicles that can handle that part of the business.
Well, to end this on an up note, every Uber driver in the world will be fired the day that happens.
So and quite frankly, I hate to say this, but that’s probably good for Uber’s bottom line.
So Tesla’s next success is Uber’s next success.
So we’ll circle back on EVs soon because the. interest in Tesla is unlimited.
So I’ll see you soon, Lee.
We’ll come back to EVs in the next few months.
Yeah, we will.
Thanks a lot, Doug.
Good to see you.