Musk has been wishy-washy on the whole Model 2 vs. Robotaxi thing
Elon Musk is good at two things: having a lot of kids and pissing people off. Now, the Tesla $TSLA CEO is angering his investors after he sent out an extremely vague social media post following a report from Reuters that the planned $25,000 Tesla is dead. He basically accused the outlet of “lying” on his social media platform, Twitter $TWTR.
That isn’t the crux of the issue for investors, though. Moreso, they’re pissed off that Musk has been so wishy-washy on the whole Model 2 vs. Robotaxi thing, according to Reuters. Is it happened or isn’t it, Elon? That isn’t their only issue, either. Investors would also very much like the sales and stock slide Tesla is dealing with to finally end. I can imagine they weren’t thrilled with the news that the Austin, Texas-based automaker just laid off 10 percent of its global workforce.
Here’s what analysts on Wall Street are telling Reuters:
“The street wants and NEEDS answers” when Tesla holds an earnings call scheduled for April 23, wrote analysts for Wedbush Securities after the layoffs were revealed. They cited a months-long “horror show” of bad Tesla news and called for a clear “strategic vision … with Model 2 a key component.”
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Wedbush Senior Equity Analyst Dan Ives told Reuters that Musk’s silence on the Model 2 was “gut-wrenching” to Tesla investors “because it’s so instrumental to the growth story.”
Ross Gerber, president and CEO at Gerber Kawasaki Wealth & Investment Management and a Tesla investor, put it more bluntly. “There’s no point in even investing in Tesla if they don’t come out with this car,” he said.
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The Street also wants clarity on another key aspect of the April 5 story: That after ditching the affordable-car project, Tesla plans to move forward with a self-driving robotaxi on the same small-car platform.
Big banks are also holding their breath when it comes to Tesla, according to Reuters:
An analysis from Deutsche Bank, echoing others, noted: “we await clarity from Tesla.” It described a Model 2 cancellation as “completely thesis-changing,” saying it would cause investors betting on Tesla’s mass-market growth to throw in the towel, making way for “AI/tech investors with considerably longer time horizons” for robotaxi development.
Wedbush sees a bleak outlook without the Model 2. Wedbush analysts wrote last week that killing the vehicle would be a “debacle” for Tesla’s growth prospects and that a robotaxi was no “magic model” to replace it.
Musk had said as recently as January that Tesla would deliver the Model 2 in the second half of 2025, confirming an exclusive Reuters report on those plans. “For the company to do a 180 in the course of three months would be ‘Twilight Zone,’” said Ives, of Wedbush. Tesla, Ives said, was already late in launching the development of the long-promised affordable model.
“A lot of this is self-inflicted – no adult in the room,” he said.
Just to make things more confusing, Musk has also posted that the Robotaxi is coming on August 8, but he didn’t give any more information than that. Odds are incredibly strong that August 8 will come and go, and no Robotaxi will be revealed. To be fair, Musk didn’t say what year it would be. He also said focusing on the Robotaxi is the “blindingly obvious move.”
For the most part, investors seem to like that idea, says Reuters. If I’m being honest, I feel like a lot of this latest Robotaxi chatter is meant to stop the stock from tumbling further.
Since the April 5 Reuters report, some investors have cheered the idea of focusing on robotaxis instead of the Model 2. Musk’s two initial posts helped reverse losses in Tesla’s stock, which dropped 6% after the Reuters report on the affordable model.
Still, Musk’s remarks left investors guessing over what vehicle Tesla plans to build next – and, critically, on what timeline. The stock dropped again with Monday’s news of the layoffs, and is now down more than 45% since a recent peak in July.
So, is a Model 2 coming? Probably not. Is a Robotaxi coming? Also not likely. Is Tesla about to face some real financial consequences for Elon Musk’s actions? Almost certainly.
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