On Wednesday, following Tesla Inc.’s (NASDAQ:TSLA) first-quarter earnings report, longtime investor and Future Fund managing partner Gary Black voiced skepticism over the company’s strategy to offer lower-priced EVs.
What Happened: In a post on X, formerly Twitter, Black expressed concern that these upcoming affordable models will simply be decontented versions of the existing Model 3 and Model Y, rather than entirely new vehicles that could expand Tesla’s total addressable market (TAM).
Black stated that Tesla CFO Vaibhav Taneja said during the call that these vehicles would be “within the [existing] form factor,” which reinforced his view that the models may not attract new buyers but instead cannibalize sales of more expensive versions.
Black also criticized Tesla CEO Elon Musk’s analogy comparing Tesla’s EV strategy to Apple Inc.’s (NASDAQ:AAPL) disruption of Nokia Corporation (NYSE:NOK).
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He argued that without truly new vehicle types, Tesla risks repeating its 2023-2024 pattern, when price cuts led to steep earnings estimate revisions with little volume growth.
A user on X said that cheap base models don’t usually sell well because buyers prefer lightly used, better-equipped versions. The user predicted that the same might happen with Tesla, too.
In response, Black said analysts are currently expecting Tesla’s sales declines to ease in the second quarter and even turn positive in the fourth quarter. However, if the affordable car flops or gets delayed, then Tesla’s full-year 2025 deliveries could drop even more.
“Without the new more affordable car, TSLA [deliveries] would likely be revised to -5% to -8% YoY,” he stated.
Why It’s Important: Tesla reported first-quarter revenue of $19.34 billion, marking a 9% decline from the same period last year and falling short of Wall Street’s consensus estimate of $21.35 billion.
The EV giant noted that it will revisit its 2025 guidance during the second-quarter update. Despite the revenue miss, Tesla said it maintains sufficient liquidity to support both its current product roadmap and long-term plans for capacity expansion.
Tesla also reaffirmed that its more affordable vehicle models are still on schedule to enter production in the first half of 2025. Additionally, the company announced that volume production of its autonomous Robotaxi, dubbed the Cybercab, is slated to begin in 2026.
Price Action: Tesla shares climbed 5.37% on Wednesday, ending the session at $250.74. However, the stock is still down 33.89% year-to-date, according to Benzinga Pro.
According to Benzinga Edge Stock Rankings, Tesla holds a growth score of 67.63%. Click here to see how it compares with other companies in the sector.
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Photo Courtesy: Trygve Finkelsen on Shutterstock.com
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
