(Bloomberg) — Tesla Inc. fleshed out plans to launch a robotaxi business Elon Musk is counting on to help usher in next phase of growth after the company posted quarterly earnings that missed estimates.
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The electric-car maker expects to start offering a paid service in Austin this June using self-driving Teslas that won’t rely on humans supervising the steering wheel, Musk said Wednesday.
But the chief executive officer’s optimism about Tesla’s work on autonomy, humanoid robots and artificial intelligence gave way to concern about declining performance in the company’s core business. Tesla shares were little changed as of 10:15 a.m. Thursday in New York, erasing an earlier 6% gain.
“The move higher in Tesla shares bore no relation whatsoever to the company’s financial performance in the quarter just completed, or to its outlook for growth in the coming year,” Ryan Brinkman, a JPMorgan analyst who rates the stock the equivalent of a hold, wrote in a report. “Tesla shares continue to strike us as having become completely divorced from the fundamentals.”
Tesla’s stock already had climbed more than 80% since the company last reported earnings, highlighting how investors were looking past financial results and viewing the shares as a proxy for the prospects of its CEO. Musk was a top donor to Donald Trump in the US election, which yielded a prime position as one of the president’s top advisers.
Musk and his executive team offered no new details on the more affordable models they’ve said Tesla is preparing to launch in the first half of this year. The company is expected to need fresh product to boost sales after failing to deliver enough vehicles in the fourth quarter to avoid its first annual decline in more than a decade.
Musk mostly steered clear of US politics during Tesla’s earnings call, a marked change from past sessions that waded into issues including inflation and industrial policy under the Biden administration. Chief Financial Officer Vaibhav Taneja did, however, warn that Tesla could be vulnerable if Trump follows through with his various threats to wage trade wars.
“The imposition of tariffs, which is very likely, will have an impact on our business and our profitability,” Taneja said, without elaborating.
Musk’s Politics
Minutes before the call started, Musk was rapid-fire posting on X, his social media service, about Trump’s recent moves to cut the federal workforce and deport undocumented immigrants. Musk started back up again minutes after the webcast ended with a post about Trump’s executive order cutting federal funding for K-12 schools that teach topics related to race, sex, gender or politics.
Tesla executives meanwhile didn’t discuss Trump’s order for his administration to consider eliminating subsidies and other policies that favor electric vehicles, including tax credits supporting EV purchases. The company generated more revenue than ever last year from helping other automakers meet emissions standards, a segment of its business that could be at risk in the US as Trump vows to ease those rules.
Musk said Tesla will start offering “unsupervised Full Self-Driving,” or FSD, in the Texas capital where the company is headquartered, adding he’s confident the service will roll out in California and “many regions” of the US by the end of this year.
Related: Tesla Sounds Out Austin Officials About Driverless Fleets
Tesla previously said in October it aimed to launch both unsupervised FSD and autonomous ride-hailing in California and Texas this year. Musk told analysts Wednesday that the only constraint he sees for the technology next year is regulation.
Self-Driving Hurdles
Tesla has long sold a suite of features it’s called FSD that require constant driver supervision and don’t make its vehicles autonomous. Musk has a track record of blowing past product timelines, particularly for self-driving technology.
Autonomous vehicles face a number of regulatory hurdles. Tesla’s Cybercab, a car lacking pedals or a steering wheel that the company expects to produce next year, would require an exemption from existing US safety standards to be allowed on US roads. Under existing rules, that permission would apply to a limit of just 2,500 vehicles per year.
States also have their own patchwork of rules for autonomous vehicles, including California, where Tesla has a permit to test them with a driver. The state could be a more challenging environment than places such as Texas, which has fewer hurdles.
Musk has called for policy changes including a national approval process for autonomous vehicles.
Tesla has given little detail on how it aims to roll out a robotaxi service. The Texas Department of Licensing and Regulation doesn’t currently list Tesla as a ride-share licensee. Musk said Tesla wants the service to be “way safer” than human drivers.
Lower Bar
Garrett Nelson, an analyst with CFRA, said Tesla’s vaguer outlook for vehicle sales growth this year resonated with investors as more realistic than Musk’s earlier pledge for growth of as much as 30%.
“The bar has been lowered to much more achievable levels, so therefore they are much more likely to hit it going forward,” Nelson said.
He added that Musk’s relationship with Trump is also seen as a positive as Tesla focuses on autonomy and the potential for changes to federal regulations.
“Musk has the president’s ear,” Nelson said. “He’s going to have a major place at the table as far as what the regulatory framework looks like — and we think it will be favorable to Tesla.”
–With assistance from Dana Hull and Richard Clough.
(Updates share move in the third paragraph.)
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