This Cannot Solve Problems at Tesla Motors
Tesla Motors Inc (NASDAQ:TSLA) stock lost about two percent on Friday and closed the session at $196.51, continuing its downward trend.
Then CEO Elon Musk sent a tweet over the weekend that the company’s surprise product now won’t be unveiled until Wednesday, as it needed more refinements. Earlier, he had announced that the unveiling of a new Tesla product would be today (Monday). This does not bode well for TSLA stock or the company’s reputation.
Such developments only reinforce the opinion that Musk is in a hurry to move on to new challenges instead of taking care of the old ones.
The media is full of stories guessing what the new “unexpected” product might be. As per a survey conducted last week, around 40% of people expected it to be “Autopilot 2.0/Tesla Vision” and 20% expected it to be “Tesla Glass”. (Source: “Tesla is about to unveil an ‘unexpected’ product: what do you think it will be? [Poll],” Electrek, October 11, 2016.)
If indeed Autopilot 2.0 is the new product to be unveiled on Wednesday, this is not what the company or TSLA stock needs right now. At a time when many doubt Tesla’s promise to meet its delivery targets, what the company needs to do is fix the production problems at Tesla. As more competitors challenge Tesla with their own electric vehicles, the new product should be one that strengthens Tesla’s lead in this segment.
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More Challenges For Tesla’s Autopilot
It was reported on Sunday that German Transport Minister Alexander Dobrindt asked Tesla to stop advertising its cars as having an “Autopilot” function. The word Autopilot suggests that the car can run on its own without the drivers’ attention, which is misleading to potential buyers. The right term to use would be “driver assistance system.” (Source: “Germany says Tesla should not use ‘Autopilot’ in advertising,” Reuters, October 16, 2016.)
Autopilot has always been under intense scrutiny following Tesla car crashes in different parts of the world. This has had negative impact on TSLA stock. Autopilot function was also the reason that Mobileye NV (NYSE:MBLY) had a falling out with the company. Mobileye was clear that Autopilot was a driver assistance system only, and could not be a driverless system as Tesla was promoting it to be. Meanwhile, Musk wants to convince everyone that Tesla’s Autopilot system is twice as safe as human drivers.
Although the company’s collaboration with Panasonic Corporation (ADR) (OTCMKTS:PCRFY) for solar energy parts may bear fruit in the future, Tesla’s merger with SolarCity Corp (NASDAQ:SCTY) is yet to go through. This is another example of how Musk is a man in great hurry.
Elon Musk needs to convince investors that the company can meet its production targets and take care of its financial troubles. If this message is not clear, there is not much upside for TSLA stock.