Tesla’s Rough Patch: Elon Musk Needs to Cross a Deep River

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[00:00:04] Doug McIntyre: Lee, Tesla may be one of the most troubled companies. They sort of big mega cap companies around. Now, the easy answer to it is, is that Elon Musk spent a lot of time with Donald Trump. People who don’t like Donald Trump, decided that they don’t wanna buy Teslas. Tesla now has less than a 50% market share in the United States for the first time ever in EVs.

[00:00:30] Doug McIntyre: They’re getting killed in Europe, double digit drops month over month there. China, the local EV companies, which as are on steroids, I mean BYD (NYSE: BYD | BYD Price Prediction), and these guys

[00:00:41] Doug McIntyre: They’re losing market share there. Now, what are they doing?

[00:00:45] Lee Jackson: Needless to say, you can say what you want about Musk, I think what he’s done has been good for the country because we, it’s our money that’s getting wasted.

[00:00:54] Lee Jackson: But, he’s edging back to like, I gotta get back to work on my stuff. The one good thing that I think that he was able to come out recently, he says the Robaxin is close. And Waymo’s been out there. In fact, they had to, they had to, recall 1200 vehicles because they were having minor crashes.

[00:01:13] Lee Jackson: But, to our viewers and our readers at 24 7 Wall Street, self-driving vehicles is the wave of the future. And think of how great it will be because you just get in there, you’ve been at the bar, you know you’re not so sure alcohol content level’s good, just say car, go home, and, but with Robo Taxi coming and we’ll see when that tends to be good. But more importantly, Musk is really starting to focus on that 20 to $25,000 model. And, and that’s what’ll get them back into the game. And, and I think everybody knows that,

[00:01:52] Doug McIntyre: Right? So he has, he has a couple of challenges.

[00:01:55] Doug McIntyre: One of them is, is that sales of his legacy cars are poor. they just came out with the new model Y, right? You can get 1.99% a PR for 72 months from them. If I go to a bank, my bank right now and ask for a car loan, it’s gonna be six to 7%. At least the, the musk is throwing money at the problem, at the sales problem right now.

[00:02:20] Doug McIntyre: and I guess understandably, because look, the oldest trick in the book, in the auto industry in the United States is incentives. Whether, you know you’re giving away, a free moon roof or you’re giving away right financing. He has to, this is an interesting trick. He has to keep Tesla attractive enough to get to the other side of the river.

[00:02:45] Doug McIntyre: And the other side of the river is Robo Taxi that works.

[00:02:50] Doug McIntyre: 20 to $25,000. EV that can be sold in the United States, Europe. Yeah.

[00:02:57] Doug McIntyre: He’s in sort of this holding pattern. In the meantime, he does not have a way to increase the sales of his legacy pro products. No. He’s gotta cross a river. It’s a fairly deep river. And on the other side, either one or both of these projects, you can’t, you can’t just have the Robo Taxi

[00:03:17] Lee Jackson: And it’s gonna be interesting to see like what’s gonna happen

[00:03:20] Lee Jackson: to the EV tax credit, it’s $7500.

[00:03:25] Doug McIntyre: Congress is the Republicans that’s going away, gas prices. So you’re really gonna need

[00:03:31] Lee Jackson: a, a $25,000 vehicle

[00:03:34] Doug McIntyre: Gas. Listen, I think part of the premise behind the EV the idea that the EV industry was gonna explode was, is that you were gonna get to the PA point where oil was scarce and gas was gonna be five or six bucks, and people will say, I’m not gonna spend all that money on gas.

[00:03:49] Doug McIntyre: I’m gonna get myself an EV. Well, guess what? I think where you live right now, I can get gas for 2.75 per gallon, regular? Lower. Okay. Alright, well 2.37. Okay. In New York it’s three and a quarter, but still the point is, is that you’ve taken away some of the incentive of buying an EV when gas prices are low.

[00:04:15] Doug McIntyre: Well, yeah.

[00:04:16] Lee Jackson: And especially when, when we’re getting to a point with the United States electric grid, this, this grid can’t hold. We’re, we’re, we’re maxed out right now. And that’s with talk about nuclear plants to run, data centers. I mean, and, and Bitcoin mining we’re tapped out now. So yeah, that’s where a, a real good looking, reasonable price sedan to go to your sort of younger buyer, millennial more than, than Gen Z, but, that that’ll be the buyer that’ll go well. Okay? Okay. Yeah, I, I can buy one for 25 grand.

[00:04:55] Doug McIntyre: So if you wanna draw a, a graph, Tesla is either a U-shaped graph, the stock.

[00:05:03] Doug McIntyre: Sales stay bad, but then they suddenly get some new products.

[00:05:07] Doug McIntyre: People get back into the stock because they’re looked at the future of automobiles, or it’s a down and flat into the future because they didn’t sell enough of the current Teslas, there was not adoption of their cheap car or they didn’t build it right, and the Robo Taxi’s a bust.

[00:05:24] Doug McIntyre: So if you’re an investor right now, look for Tesla to be a U-shaped, in terms of the way it’s gonna trade for the next two, three years or a down and just keep moving to the right stock. So yeah, and

[00:05:38] Lee Jackson: it’s certainly, unless something just blew wide open, it’s certainly not gonna be like a hockey stick sort of recovery either, where, we just like that sort of.

[00:05:48] Lee Jackson: that’s not gonna happen either. So yeah. Either it’s gonna, now it, it came off the lows and, and you gotta believe there was during the big sell off. You gotta believe there was a ton of, of short pressure on it, which it, it bounced back pretty big. But a lot of that was short covering, that wasn’t really people going, whoa, this is cheap.

[00:06:09] Lee Jackson: I gotta own it. I, and, and it’s interesting because I, I heard, the typical television media, business news. Teleprompter readers as I like to call ’em. they’re talking about like, well, that may be all the, that’s in there for Tesla, but don’t ever count that guy out. I would never count that man out.

[00:06:29] Lee Jackson: He’s the Thomas Edison of our generation, and, and he’ll figure a way to get

[00:06:33] Doug McIntyre: this right. I’m not counting ’em out, Lee, but what I’m saying is, is that their rough patch could last a while when you see that they’re gonna come out with Q2. Unit sales, early July, whatever, and then you know, two or three weeks later they’re gonna come out with earnings, right?

[00:06:51] Doug McIntyre: I think Q2, the numbers are gonna be really rough. I think you’re right. Whether Q3 gets better or not, I think it’s way too early to say, but there’s not gonna be confidence in the this stock until either earnings get better. You’re starting to see better sales because of new products. I mean, they, they can’t,

[00:07:12] Lee Jackson: and, and there’s not gonna be the Wall Street there.

[00:07:16] Lee Jackson: There’s been a Wall Street cheering crowd for this stock for years now, and that maybe won’t be quite as vocal until he goes back to his day job.

[00:07:27] Doug McIntyre: Anyway, I’m looking at, I’m looking at it as a U-shaped trade. Yeah. Or an L-shaped trade. I, you’re right, it is not a hockey stick trade.

[00:07:36] Lee Jackson: No, it’s not. But we’ll review when the, when the numbers come out, we’ll come back and we’ll let everybody know.