Investor's Corner
Tesla’s battery tech and software push is starting to make sense for veteran vehicle-makers
When Tesla was designing the Model S, the company made it a point to build the vehicle from the ground up. This means that everything, from the electric cars’ battery packs to its software, are manufactured by Tesla itself. Tesla’s approach to electric cars is the auto equivalent of Apple’s strategy with the iPhone and iOS, and it finally seems to be making sense to some legacy vehicle-makers.
Elon Musk’s private space firm, SpaceX, is known for producing its rockets in-house. Musk took this same approach with Tesla in the company’s early days, and the result of this approach was the Model S, a vehicle like no other on the road, with simple, powerful, all-electric internals and a software that is custom-built for the car. A particularly telling image of this hands-on, in-house approach was taken during the company’s younger days, featuring a much younger CTO JB Straubel assembling one of Tesla’s early battery packs by hand.
And in a lot of ways, this strategy worked. Tesla’s in-house approach for the Model S was a key point in the vehicle’s allure to consumers. This carried over to the Model X, and now, the Model 3. With Tesla’s 2170 cells used in the Model 3 gaining rave reviews from teardown experts like Sandy Munro of Munro and Associates, and with the company preparing to release Software Version 9, Tesla is poised to take even bigger steps in its mission to usher the transition to sustainable mobility.
Tesla’s history is rife with criticism and doubts from the veterans of the auto industry, but now that the company has established itself as a leader in the premium electric car segment, its progress and breakthroughs now seem to be undeniable, even to traditional vehicle makers.
Just recently, a report from German publication Electrive emerged, citing insiders from Jaguar who noted that the veteran carmaker will be using Samsung SDI’s cylindrical 2170 battery cells for the electric cars it would produce from 2020 onwards. This is a big step for Jaguar, considering that the I-PACE, its first all-electric vehicle that can actually compete with the Model X 75D and 100D in terms of performance, is currently using pouch cells from LG Chem.
Using Samsung SDI’s 2170 cells for its electric cars’ batteries would likely benefit Jaguar, considering that the I-PACE is currently being bogged down by reports that the vehicle is lacking in efficiency and range. Jaguar might never admit it, but it’s not difficult to infer that the company’s decision to reportedly commit to 2170 cells was partly influenced by Tesla’s progress in its battery tech.
Tesla Model 3s side by side in a parking lot.
Another vehicle-maker is starting to see the value of software and its relationship to hardware. Earlier today, veteran motorcycle maker Harley-Davidson stated that it is planning to open a dedicated research and development facility in Silicon Valley to support its plans for its upcoming line of electric bikes. Harley-Davidson plans to release its first motorcycle, dubbed the “LiveWire,” sometime next year, and it would be the first of a line that features a “twist and go” system. The LiveWire is set to be followed by other electric bikes in 2022 as the company transitions to producing cleaner and possibly even quicker, more powerful vehicles.
Seemingly taking a cue from Tesla, Harley Davidson is now in full throttle recruiting Silicon Valley talent in electrical, software, and mechanical engineering. Just like Jaguar and its decision to commit to 2170 cells, Harley-Davidson’s decision to establish a Silicon Valley-based team seems to be inspired partly by Tesla and its software-focused electric cars.
Tesla is not a perfect company by any means, and its leader, Elon Musk, is not infallible. Musk himself would be the first to admit that Tesla committed a lot of errors in the past, and it is through these failures that the company was able to fail forward. Tesla is now a much more mature electric car maker that knows its market and knows what it’s doing; and if the recent updates from Jaguar and Harley-Davidson are any indication, it appears that other vehicle-makers are now starting to realize the value of Tesla’s experience.
Investor's Corner
Tesla is ‘better-positioned’ as a company and as a stock as tariff situation escalates
Tesla is “better-positioned” as a company and as a stock as the tariff situation between the United States, Mexico, and Canada continues to escalate as President Donald Trump announced sanctions against those countries.
Analysts at Piper Sandler are unconcerned regarding Tesla’s position as a high-level stock holding as the tariff drama continues to unfold. This is mostly due to its reputation as a vehicle manufacturer in the domestic market, especially as it holds a distinct advantage of having some of the most American-made vehicles in the country.
Analysts at the firm, led by Alexander Potter, said Tesla is “one of the most defensive stocks” in the automotive sector as the tariff situation continues.
The defensive play comes from the nature of the stock, which should not be too impacted from a U.S. standpoint because of its focus on building vehicles and sourcing parts from manufacturers and companies based in the United States. Tesla has held the distinct title of having several of the most American-made cars, based on annual studies from Cars.com.
Its most recent study, released in June 2024, showed that the Model Y, Model S, and Model X are three of the top ten vehicles with the most U.S.-based manufacturing.
Tesla captures three spots in Cars.com’s American-Made Index, only U.S. manufacturer in list
The year prior, Tesla swept the top four spots of the study.
Piper Sandler analysts highlighted this point in a new note on Monday morning amidst increasing tension between the U.S. and Canada, as Mexico has already started to work with the Trump Administration on a solution:
“Tesla assembles five vehicles in the U.S., and all five rank among the most American-made cars.”
However, with that being said, there is certainly the potential for things to get tougher. The analysts believe that Tesla, while potentially impacted, will be in a better position than most companies because of their domestic position:
“If nothing changes in the next few days, tariffs will almost certainly deal a crippling blow to automotive supply chains in North America. [There is a possibility that] Trump capitulates in some way (perhaps he’ll delay implementation, in an effort to save face).”
There is no evidence that Tesla will be completely bulletproof when it comes to these potential impacts. However, it is definitely better insulated than other companies.
Need accessories for your Tesla? Check out the Teslarati Marketplace:
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Tesla (NASDAQ: TSLA) received a price target boost from analysts at Truist Securities, but it came with some criticisms based on a lack of information on several things that investors were excited to hear about regarding future vehicles and AI achievements.
Last night, Tesla reported its earnings from the fourth quarter of 2024, and while it had a very tempered financial showing, missing most of the Wall Street targets that were set for it, the stock was up after hours and on Thursday due to the details the company released regarding its plans for 2025.
CEO Elon Musk stunned listeners last night by revealing plans to launch unsupervised Full Self-Driving as a service in Austin in June 2025. It will be the first time Tesla will offer driverless FSD rides in public, something it has been working with the City of Austin on since December.
Tesla to launch unsupervised Full Self-Driving as a service in Austin in June
It also reiterated plans for affordable models to be launched this year, potentially catalyzing annual growth in deliveries, something it said it expects to resume in 2025.
Tesla was flat on deliveries in 2024 compared to 2023.
The positives during the call were enough for Truist Securities analyst William Stein to raise the company’s price target to $373 from $351. However, Stein’s note to investors showed there was something to be desired despite all the good that was revealed during the call:
Stein said there was “not enough ground-truth” during the call and too much of a focus on “cheerleading” the company’s potential releases this year:
“Too much cheerleading; not enough ground-truth. In Q4, TSLA’s ASP weakness drive revenue, GPM, OPM, & EPS below consensus.”
As previously mentioned, Tesla did report weak financials that missed consensus estimates. What saved the call and perhaps the stock from plummeting on these missed metrics was the other details that Musk revealed, especially the FSD launch in Austin in June.
There were also plenty of things related to the affordable models and other vehicles, like the fact that Tesla plans to include things like Steer by Wire, Adaptive Air Suspension, and Rear Wheel Steering, that helped offset negatives.
Stein saw this as a distraction from what should have been reported:
“While CEO Elon Musk played the role of cheerleader, calling for TSLA’s path to massive market cap by leading in autonomy, management was remarkably short on two critical details: (1) info about new vehicles in 2025 and (2) milestones for AI acheivements, especially FSD. We continue to ask ourselves ‘where’s the beef?’ CY26 EPS to $3.99 (from $4.87). DCF-derived PT to $373 (from $351).”
Tesla did detail some AI milestones, like its record-breaking miles per accident on Autopilot, which was a Q4-best of 5.94 million miles. The Shareholder Deck also outlined major upgrades to AI:
“In Q4, we completed the deployment of Cortex, a ~50k H100 training cluster at Gigafactory Texas. Cortex helped enable V13 of FSD (Supervised)1, which boasts major improvements in safety and comfort thanks to 4.2x increase in data, higher resolution video inputs, 2x reduction in photon-to-control latency and redesigned controller, among other enhancements.”
Tesla shares are up 2.11 percent on Thursday as of 12:05 p.m. on the East Coast.
Need accessories for your Tesla? Check out the Teslarati Marketplace:
- https://shop.teslarati.com/collections/tesla-cybertruck-accessories
- https://shop.teslarati.com/collections/tesla-model-y-accessories
- https://shop.teslarati.com/collections/tesla-model-3-accessories
Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.
Tesla has released its Q4 2024 vehicle safety report. Similar to data from previous quarters, vehicles that were operating with Autopilot technology proved notably safer.
The Q4 2024 report:
- As per Tesla, it recorded one crash for every 5.94 million miles driven in which drivers were using Autopilot technology.
- The company also recorded one crash for every 1.08 million miles driven for drivers who were not using Autopilot technology.
- For comparison, the most recent data available from the NHTSA and FHWA (from 2023) showed that there was one automobile crash every 702,000 miles in the United States.
Previous safety reports:
- In Q3 2024, Tesla recorded one crash for every 7.08 million miles driven in which drivers were using Autopilot technology and one crash for every 1.29 million miles driven by drivers not using Autopilot technology.
- In Q2 2024, Tesla recorded one crash for every 6.88 million miles driven in which drivers were using Autopilot technology, and one crash for every 1.45 million miles driven for drivers not using Autopilot technology.
- In Q1 2024, Tesla recorded one crash for every 7.63 million miles driven in which drivers were using Autopilot technology, and one crash for every 955,000 million miles driven for drivers not using Autopilot technology.
Year-over-Year Comparison:
- In Q4 2023, Tesla recorded one crash for every 5.39 million miles driven in which drivers were using Autopilot technology and one crash for every 1.00 million miles driven for drivers not using Autopilot technology.
Key background:
- Tesla began voluntarily releasing quarterly safety reports in October 2018 to provide critical safety information about our vehicles to the public.
- On July 2019, Tesla started voluntarily releasing annual updated data about vehicle fires as well.
- It should be noted that accident rates among all vehicles on the road can vary from quarter to quarter and can be affected by seasonality, such as reduced daylight and inclement weather conditions.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
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