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Tesla to unveil Robotaxi later this year, but one bull says it's 'not the answer'

Published 04/11/2024, 05:21 PM
© Reuters.

Investing.com -- Tesla Inc (NASDAQ:TSLA) chief executive Elon Musk whetted investor appetite after detailing plans to unveil its robotaxi product on Aug. 8, but one prominent Tesla bull believes it isn't the answer to help restore faith in the EVs maker's future growth. 

"Robotaxi is not the answer for now," Wedbush analysts Dan Ives said in a note, adding that the key part of the future growth story for Tesla is the launch of a Model 2 vehicle at a price tag below $30,000. 

Like its EV peers, Tesla has been wrestling with challenging demand backdrop for EVs at time when competition in the space has been heating up as China EV makers including BYD (SZ:002594) rise to prominence.

Last week, Tesla reported that first-quarter deliveries fell 8.5% from a year earlier, drawing negative remarks from a slew of analysts on Wall Street pressuring the stock to add to its nearly 30% losses year to date.

"For Musk, this is a fork in the road time to get Tesla through this turbulent period otherwise dark days could be ahead," Wedbush said. 

A lower priced Tesla, however, would go some way to help the EV maker regain confidence in the eyes of Wall Street as it would drive "mass demand globally in this EV landscape," Ives says, estimating that about 60% of future growth the next few years will come from Model 2.

Uncertainty on whether Tesla still plans to launch the Model 2, which was set to hit the roads by late 2025 or early 2026, has come under spotlight following a Reuters report that Musk had scrapped plans to launch a cheaper EV. Musk, however, denied the report that Model 2 had been binned.    

But if Tesla is reportedly scrapping its Model 2 plans, and views its Robotaxi, or self-driving taxi, as the "magic model" to replace Model 2, this would be a negative for the Tesla story and a risky gamble, Ives added.

"Robotaxi is the not the near-term answer to fill this growth gap while Model 2 is and this dynamic must be conveyed to the Street on the conference call April 23," Wedbush added. 

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