Tesla Inc. (NASDAQ: TSLA), despite reporting a 71% drop in net income, is still in the black this morning.
Not everyone is as optimistic.
Steve Westly, the former board member of Tesla, agrees that investors should sell Tesla stock unless two things are done:
- Launch of a model priced below $30,000
- Fix full-self-driving (FSD).
Westley argued that TSLA’s current valuation of $1.24 billion is not justified unless it delivers on these promises in a CNBC Interview on Thursday.
Tesla needs to offer a cheaper model in order to remain competitive
Steve Westly called on the need for Tesla to launch a lower-cost model to stay competitive against Chinese rivals, particularly the Shenzhen-headquartered BYD.
He then went on to criticize Tesla’s slowness in releasing new products.
Westly reports that the company is in desperate need of a model under $30,000 after its last, Cybertruck, was a failure.
BYD has set up factories in South America and Thailand.
The company’s new factories suggest that it is preparing to flood the European markets with its electric vehicles.
This will put pressure on Tesla. “They’ve got to come up with a low-cost car,” Westley added.
The good news is that “battery costs are falling quickly and they’re expected drop another 50% by the end this decade”, which should make it easier for Tesla to reach this first target.
Tesla must fix self-driving in order to justify premium pricing
Tesla stock has enjoyed a premium for years because billionaire Elon Mots continues to promise self-driving capability in the company’s cars every year.
Tesla must now advance its FSD plan if it is to reach its premium valuation.
Westly said that “They are lagging behind Waymo and there is a lot to catch up on.”
The National Highway Traffic Safety Administration is currently investigating Tesla’s self-driving car technology after multiple reports of FSD related crashes.
Steve Westly says that a good place to start would be to get regulatory approval in Austin for the autonomous driving system.
Elon Musk, the CEO of Tesla Motors, expects to launch “unsupervised self-driving” as a “paid service” in Austin by June.
Westly’s remarks follow Tesla’s fourth-quarter earnings.
The EV maker’s earnings in Q4 were boosted by its bitcoin holdings, which accounted for 73 cents per share.
The company’s earnings per share fell below the analysts’ forecast of 76 cents.
Tesla stock currently does not pay dividends.
This post Tesla’s ex-board member calls the stock “sell”–here’s Why may be modified as new information becomes available
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