Amid the decline in sales of Tesla (TSLA) electric vehicles, shareholders are contrarian. They believe in CEO Elon Musk’s Master Plan 4. This is a necessary strategy for pivoting Tesla’s business which includes autonomous driving and artificial intelligence.
Musk’s plans likely account for the rise of China EVs in the global marketplace. BYD (BYDDF) took over Tesla as the biggest market for hybrid and EV vehicles. Xiaomi (XIACF) pivoted its growth out of smartphones and into EVs. It boasted pre-sale bookings of 100,000 SU7s for the full year of 2024. Reports of questionable quality, such as the brakes, and software, are immaterial to Tesla’s business.
The firm has yet to achieve full ADAS. Customers who pre-paid for the software are still waiting for its release.
Musk may tighten the integration of Tesla with his privately owned companies. XAI in AI, X in social media, and SpaceX may share a common software architecture.
Risks
Shareholders are not concerned about Tesla’s premium valuation. They are not pricing in the rising pressure of Chinese EV firms like BYD, Li Auto, and Nio (NIO) taking Tesla’s business. Although the competition is not as severe in the U.S., Tesla cannot grow in countries that welcome Chinese EVs. This includes South America and Europe.
