Investors are becoming increasingly restless as Tesla CEO Elon Musk remains silent about the scrapped plans for the $25,000 “Model 2” electric vehicle. Musk’s cryptic social media posts following a Reuters report on the project’s cancellation have left shareholders demanding clear answers on the Model 2 and Tesla’s plans for addressing falling electric vehicle demand and competition from Chinese EVs.
Analysts from Wedbush Securities have called for a clear “strategic vision” from Musk, with the Model 2 seen as a key component. The lack of information regarding the Model 2 has been described as “gut-wrenching” for investors, as it is considered instrumental to Tesla’s growth story.
Some, however, have cheered the idea of focusing on self-driving robotaxis instead of the Model 2. Musk’s initial posts helped reverse losses in Tesla’s stock, which had dropped 6% after the Reuters report. It remains unclear what vehicle Tesla plans to build next and on what timeline, causing further uncertainty among investors. Tesla’s stock has dropped over 45% since July.
While the market capitalization of Tesla remains high at around $500 billion, some investors are concerned about the lack of clarity surrounding Tesla’s growth prospects. A Deutsche Bank analysis warns that clarity is needed from Tesla and describes the cancellation of the Model 2 as “completely thesis-changing.” Wedbush analysts also see a bleak outlook without the Model 2, stating that a robotaxi is not a sufficient replacement.
Tesla’s cheapest model currently available is the Model 3, priced at about $39,000 in the US. The company has been facing challenges in producing its more expensive Cybertruck and has experienced an 8.5% drop in sales in the first quarter.
Chinese EV makers, such as BYD and Xiaomi, have dominated the entry-level EV sector with their affordable models priced as low as $10,000. The competition from Chinese companies poses a threat to Tesla in terms of market share and pricing.
Some investors support the idea of focusing on robotaxis, believing it could be a “brilliant” and “gutsy” move for Tesla. They argue that autonomous vehicles will be a higher-margin business and could potentially help Tesla surpass its Chinese rivals. However, others emphasize the need for concrete progress and results, rather than just promises from Musk.
Ultimately, Tesla investors are eagerly awaiting clear answers from Musk regarding the future direction of the company. The lack of transparency has caused concern among shareholders, who are looking for reassurance about Tesla’s growth prospects and ability to compete in the evolving electric vehicle market.