Tesla shares surged nearly 12% in pre-market trading on Thursday after the company forecast a significant rise in car sales, calming investor fears about CEO Elon Musk’s shifting focus from electric vehicles (EVs) to robotics and artificial intelligence.
The stock rally is set to add approximately $80 billion to Tesla’s market value, recovering losses from recent weeks when investors grew anxious over Musk’s attention to new projects, such as the robotaxi, which he claims will be a key driver of future growth.
Reassurance of EV Expansion
While Musk has been steering Tesla towards becoming more of an AI and robotics firm, concerns arose when he failed to present a clear business plan for these initiatives. His announcements last quarter focused heavily on futuristic technologies—from driverless taxis to humanoid robots—leading to fears about Tesla’s shrinking profit margins due to reduced vehicle prices.
However, during a post-earnings call on Wednesday, Musk alleviated some of these worries by projecting a 20% to 30% increase in car sales for the coming year. He also assured investors that cost-cutting measures in production were helping to improve margins. Musk hinted at plans for an affordable vehicle, reaffirming his commitment to Tesla’s core EV business.
Bold Robotaxi Plans
Musk’s latest efforts to expand into driverless technology were showcased at an event earlier this month, where Tesla unveiled a two-seater robotaxi dubbed the Cybercab, which is slated for production in 2026. The Cybercab, which will be priced under $30,000, will feature no steering wheel or pedals. Tesla also introduced a 20-seater autonomous van and showcased humanoid robots during the event.
Despite the fanfare, investors were initially disappointed by the lack of detail on how quickly Tesla could ramp up production of these autonomous vehicles, as well as the inevitable regulatory challenges the company would face. This disappointment led to a drop in Tesla’s stock price following the event.
On Wednesday, Musk sought to quell these concerns by stating Tesla’s goal of producing at least 2 million Cybercabs annually. However, he acknowledged that the company could face significant regulatory hurdles, particularly in California, where he expects to encounter challenges in gaining approval for the robotaxis.
Musk said, “I’d be shocked if we don’t get approval next year,” while admitting that it is not entirely within the company’s control.
Core EV Business Still in Focus
For now, Musk’s reassurances regarding Tesla’s core EV business appear to be enough to keep investor concerns at bay. The strong sales forecast and improved production efficiency have shifted focus back to the fundamentals of the company’s electric vehicle offerings. Nonetheless, investors remain cautious about Musk’s ambitious plans in AI and robotics, with the spotlight expected to shift once again next quarter.
