TSLA : Rally or Crash in Week of 07 Oct ?
Where will $Tesla Motors(TSLA)$ be this time, next week - Sun, 13 Oct 2024 ?
It would effectively be 3 days - post its autonomous driving “capability / disability” reveal on Thu, 10 Oct 2024. at Warner Bros. studio in Burbank, California.
With the recent happenings to the EV carmaker the week before, how will the stock perform:
By end of unveil week.
By end of October 2024.
To make sense of it all, hopefully looking at what have transpired this past week, will provide valuable insights for the coming week.
(1) CIO Resigns 12 Years On.
On Fri, 04 Oct 2024, it was reported that Tesla’s long serving Chief Information Officer (CIO) Nagesh Saldi has resigned. (see above)
Staff attrition is part and parcel of a company, a “natural” process. However, the same logic could not be applied to C-suite.
Especially, not when in 2024 alone, easily 10% of Tesla’s executive have left the building.
By May 2024:
Hd of Product launches, Rich Otto resigned after 7 years.
Snr director of Charging infrastructure, Rebecca Tinucci resigned after 6 years.
Director of New product introduction, Daniel Ho, resigned after more than 10 years.
Senior VP of Powertrain & Energy engineering, Drew Baglino resigned after 18 years.
VP of Public policy & Business development, Rohan Patel resigned after 8 years.
Artificial intelligence Manager, Paril Jain resigned after 7 years.
Manufacturing Hd of Cybertruck, Renjie Zhu resigned after 5 years.
VP of Finance & Business Operations, Sreela Venkataratnam, resigned after 11 years.
My Thots: Looking at the compilation, is it any wonder why Tesla has performed “poorly” in recent times when “structurally” the company is so fractured ?
(2) EU’s Director Resigns 7 Years On.
Besides Nagesh Saldi, there was another significant resignation at the “same” time. (see above)
There was almost no US media coverage because it’s not a US C-suite,(lame).
Tesla Europe, Director of Public Policy and Business Development for EMEA - Jos Dings have resigned after more than 7 years on the job.
My thots: Will Europe sales get “weaker” gradually, with the departure of a veteran who knows the company inside out and involved in building Tesla German Giga factory at Berlin-Brandenburg?
3. Cybertruck Recall
On Fri, 04 Oct 2024 - it was reported that Tesla would recall > 27,000 Cybertrucks in the US. (see above)
This is due to delayed rear-view camera images that could (1) impair driver visibility and (2) increase crash risks.
This will be the 5th recall issued by Tesla, for 2024-Cybertruck-models since January 2024.
The recall of all delivered Cybertrucks due to faulty parts is a significant negative factor.
Recalls are costly and damage brand’s reputation, that Tesla could ill afford.
(4) Robotaxi Unveil.
Tesla’s delayed unveil of its robotaxis on Thu, 10 Oct 2024 is a a significant Tesla event.
Despite almost 10 years of bold predictions and missed deadlines, fans are hanging onto the hope that Mr CEO will deliver come Thursday.
Skeptics and true believers will find out whether he can deliver.
Competitors’ Robotaxis.
In the decade that Musk has promised driverless vehicles, competitors have realized them.
Alphabet-owned Waymo already operates a commercial robotaxi service in several US cities, surpassing 100,000 paid rides per week as of August 2024.
Amazon-owned Zoox began testing rides for employees in February 2023 with ambitions to launch its own robotaxi service.
Elsewhere in China, Pony.ai and Baidu are running commercial robotaxi services too.
Is Tesla really robotaxi innovator and AI front runner ? Erh, hold that thought !
Why it matters.
With new competitors eating into Tesla's electric vehicle market share, Musk is pivoting the company to artificial intelligence (AI), including robotaxis.
3 Critical Factors.
Tesla’s “success” hinges on 3 important factors that must be adequately addressed.
(a) Mystery Car.
Until the actual robotaxi revealed, the big question remains : does it have a steering wheel & pedals?
The answer matters. Without such human controls, Tesla would need an exemption from federal motor vehicle safety standards to deploy them on US roads.
That isn't likely. General Motors tried for years to get such an exemption, finally giving up and scrapping its own purpose-built Origin robotaxi in July, citing "regulatory uncertainty."
For the record, Mr CEO has been adamant, that Tesla build a truly revolutionary robotaxi; one that is without a steering wheel or pedals.
Extract from his Walter Isaacson’s biography - "This is the product that makes Tesla a 10 trillion company" and "People will be talking about this moment in 100 years."
(b) Technology claims.
What is known.
Tesla has chosen a different development path unlike other autonomous-driving makers, including Waymo, the undisputed market leader, whose robotaxis are operating in several cities, already.
Instead of machine learning methodology to train cars to recognize (i) road signs, (ii) pedestrians and (iii) then behave in a certain way, Tesla uses a neural network that learns from video data how to drive like a human.
Such end-to-end AI systems (known as AV 2.0) are viewed by some as a (a) faster, (b) more capital-efficient way to teach robots to drive. The trade-off is it requires massive amounts of data to train the AI models.
Tesla's Advantage.
Tesla collects tons of video snippets of everyday driving from its own fleet of 2.2 million cars on the road, giving it a large data sample.
The downside is that such deep learning systems are a "black box". This means if something goes wrong, it's impossible to trace the car's thought process to find out why it made the decision, and reprogram it, if necessary.
This kind of "train & pray" approach to development is problematic in a safety critical industry, Sterling Anderson, co-founder of autonomous trucking company Aurora, said on a recent webcast.
Tesla’s Scrutiny.
From federal auto safety regulators for hundreds of crashes in which Tesla’s Autopilot technology failed to protect drivers and passengers.
Critics say Tesla's camera-based system cannot always see in bad weather and darkness. Other AV companies use a combination of camera, radar and laser sensors.
Musk needs to prove that Tesla's FSD is safer than a human driver, a remark he has made many times without any substantiating fact.
(c) The Business Model.
The Cybercab, coined by Mr CEO, if cleared by regulators would be the basis for a future Tesla robotaxi service.
Mr CEO’s grand vision is to turn Tesla's customer-owned fleet into an “Airbnb on wheels”, with owners sending their driverless cars to pick up riders when they are not using them.
For that to work, Tesla needs to share more details, like (a) who is liable in case of an accident or theft, (b) who will clean and maintain cars between rides and (c) who pays for the car insurance.
4. Technical Analysis.
Below is a snapshot view of Tesla’s latest stock price movement, from a technical analysis (TA) perspective.
Tesla YTD - stock price & moving averages
Moving Averages (ma): On Fri, 04 Oct 2024 - Tesla’s stock closed at $250.08. Its 50-day ma is a critical support level and Tesla is above it, indicating a bullish trend.
Tesla's RSI as of Fri, 04 Oct 2024
Relative Strength Index (RSI): Tesla’s Friday RSI stood at “57”. It is neither “Overbought” nor “Oversold”, indicating there is room for “growth”.
Volume: Friday’s trading volume was a very healthy 86.57 milions shares changing hands. With a high volume on Friday, that was an “Up” day, suggests strong buying interest.
My viewpoints: (mine only)
Rich Otto’s insightful post on his LinkedIn account have confirmed:
The working dynamics after the layoffs, had thrown Tesla "out of balance".
It’s getting harder to see the long-game for the company.
Based on rule of thumb, people leaving before big announcements can be interpreted as (a) a disapproval or (b) a vote of no confidence of what is to be announced.
Could this have been the other reason for Tesla’s weak performance besides its “failure to meet” its quarterly earnings forecast?
If you have noticed, US market generally reacts positively to product launches, especially those that promise to revolutionize the industry.
Is the ”impending robotaxi unveil ” the speculative catalyst that accounts for Tesla’s upwards trend since 7 Aug 2024 ? Plausible ? (see below)
On 03 Oct 2024, Tesla posted its Q3 deliveries and production numbers. (see above)
The stock fell as much as -3.7% after the report. (see below)
Miraculously, it “fell & bottomed” at the same time on 03 Oct 2024 and turned around the following day.
The “euphoric” sentiments due to stellar US non-farm payroll data for September 2024 helped, but to “erase” all the losses incurred the day before ? Mmm….
The anticipation of the robotaxi event should be the driving force, in the days leading to the unveiling.
My thots : Is market and fans lapping up Mr CEO’s wild “out of the box” visions because (like it or not) this multi-billion market cap company has attained “cult & meme” status, at the same time ?
Conclusion
Given the mixed factors at play, Tesla’s stock price could experience significant volatility in the week beginning 7 Oct 2024.
The positive sentiment from the robotaxi unveiling might be offset by negative impact of the CIO’s resignation, Cybertruck recall and missed delivery numbers.
Investors should (1) closely monitor these events, (2) closely monitor its stock price & movement and (3) have a plan-B ready to be executed at short notice.
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Do you think Tesla will be volatile leading up to 10 Oct 2024?
Do you think Tesla’s robotaxi - technology wise - will be a cut above existing Robotaxis that are already generating income for their respective parent-company eg. Waymo for $Alphabet(GOOG)$ and Cruise for $General Motors(GM)$ ?
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