Gary Black Says Removal Of Safety Monitors Would Allow Tesla To Scale Robotaxis Up To 'Thousands' — Expects Strong Q3 Performance
News Summary
Gary Black, managing director of Future Fund LLC, believes Tesla's plan to remove onboard safety monitors from all Robotaxis by year-end is the main catalyst for the company's stock, aided by proposed regulatory easing. Black expects Tesla stock to remain strong through Q3 but notes that even a 5,000-strong Robotaxi fleet would have minimal earnings impact (8-10 cents per share) in 2026. He also suggested a new affordable model wouldn't be a stock catalyst unless it's significantly differentiated from the Model Y. Dan Ives of Wedbush Securities predicts autonomous driving and AI represent a $1 trillion opportunity for Tesla. Concurrently, Tesla is ramping up production at its Gigafactory near Berlin to meet demand from 37 markets, including Europe, the Middle East, and Taiwan. However, despite increased production, Tesla's European sales fell 40.2%, coinciding with BYD's surge in the region. Conversely, Ross Gerber, co-founder of Gerber Kawasaki, cautioned against optimism, stating that good sales news could end in two weeks as the $7,500 federal EV credit expires. Separately, Tesla reportedly discontinued the most affordable Cybertruck trim, and its market share dropped below 40% for the first time in eight years.
Background
Tesla Inc. has long pursued autonomous driving technology, with its Full Self-Driving (FSD) software package central to its future vision. The Robotaxi business is seen by Elon Musk as a massive growth opportunity for the company, poised to significantly expand its service reach and profitability. The administration of incumbent US President Donald J. Trump, re-elected in 2024, is generally perceived as supportive of business and technological innovation, potentially creating a favorable environment for companies like Tesla to seek regulatory easing in high-tech sectors such as autonomous driving. Concurrently, Tesla faces intensifying competition in the global EV market, with its market share having fallen to an eight-year low. Changes to federal EV tax credits also pose potential short-term sales challenges.
In-Depth AI Insights
1. Is the key growth bottleneck for Tesla's Robotaxi business truly technology or regulation, or rather market acceptance? - While the article highlights regulatory easing and the removal of safety monitors as crucial for scaling Robotaxis, the true test lies in consumer trust and acceptance of fully autonomous services. - Even if technical and regulatory hurdles are cleared, public safety concerns, psychological barriers to driverless vehicles, and potential liability issues could constrain expansion more than the pace of vehicle deployment. - Investors should critically assess the realistic speed of market penetration, rather than solely focusing on technical deployment capabilities. 2. How does the divergence between Wall Street's optimistic (Dan Ives) and cautious (Ross Gerber) views on Tesla reflect the core challenges facing the company? - This divergence reflects the complex trade-off in Tesla's valuation between its traditional automotive business and its future technology ventures (autonomous driving, AI). - Ives represents bullishness on disruptive technology and long-term growth potential, viewing Tesla as an AI company rather than just a car manufacturer, which underpins his trillion-dollar valuation potential. - Gerber's concerns are rooted in short-term market fundamentals, such as the expiration of EV tax credits and increased competition, which directly impact traditional vehicle sales and profitability, potentially eroding the company's near-term cash flow. - This duality indicates that Tesla's investment narrative is shifting from a pure EV leader to a more complex hybrid, reliant on both the realization of future technologies and the stability of its legacy business. 3. What are the implications of Tesla discontinuing the most affordable Cybertruck trim and its declining market share for its medium-to-long-term strategy and brand positioning? - The discontinuation of the affordable Cybertruck trim, coupled with its market share falling below 40%, suggests Tesla may be recalibrating its product strategy, focusing more on higher-margin models or differentiated premium segments. - This adjustment might aim to boost short-term profitability but could come at the expense of market share, especially against competitors like BYD offering a wider range of price-competitive models. - For investors, this implies Tesla's growth story might no longer be solely about sales volume expansion but increasingly about profit margin optimization and the ability to command a premium for innovative technologies. However, this could also put further pressure on its penetration in the mass market, impacting its long-term scale effects.