Elon Musk is having a mixed message moment. He keeps saying Tesla is an AI company, even though they’re the leading seller of electric cars in the US, with the current best-seller globally!
If Tesla is truly an AI company, shouldn’t someone else be running the car side of things?
Lately, Tesla’s car business has been suffering. Their market share is dropping, and their newest car is expensive, riddled with quality issues, and behind schedule. They’ve repeatedly cut prices to boost sales of their main models.
On top of that, their flagship vehicles are built on an outdated platform, and other promised models like the Semi truck and the Roadster are MIA. The Model 2 might even be canceled.
No wonder Musk doesn’t want Tesla to be seen as just a car company!
Musk seems to be putting all his eggs in the AI basket. He talks mostly about Tesla’s AI progress in public comments, product plans, and even earnings calls. He claims Tesla will crack self-driving car technology, and that their entire company value hinges on their lead in AI and autonomous vehicles.
According to Musk, “If you value Tesla as just an auto company…it’s the wrong framework.” He even goes so far as to say that anyone who doubts Tesla will solve self-driving cars shouldn’t invest in the company.
Tesla: Wall Street Sees an AI Giant, But Are They Right?
While Elon Musk focuses on Tesla as an AI company, Wall Street analysts seem to be on board. They assign only 20% of Tesla’s stock value to the car business, believing the real potential lies in AI, from self-driving cars to factory worker robots.
However, there’s no clear proof yet that Tesla is a leader in self-driving car technology or general AI. Their current system is more like a driver assistance system with limited capabilities.
Tesla’s Two Big Challenges
Tesla faces two major challenges, regardless of its current AI standing.
Maintaining Dominance in Electric Vehicles: Tesla needs to stay ahead of the competition as a leading electric car maker.
Becoming an AI Powerhouse: They also need to significantly transform their business model to become a major player in the AI industry.
Should Tesla Split the Business?
Since Musk seems more passionate about AI, some experts propose splitting Tesla’s car business into a separate company. This new company could be run by someone more focused on the day-to-day operations and long-term planning required for successful car manufacturing.
Building millions of cars requires careful planning years in advance, dealing with regulations, investing in customer service, and constantly adjusting prices and product strategies. This focus on steady improvement might not be a good fit for Musk’s more disruptive style.