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The meeting took place just days after Musk announced that there will be a new person heading up Twitter, signaling to TSLA shareholders he may have more time to spend on the electric vehicle giant.
The multi-billionaire reiterated his commitment to remain as the CEO of Tesla, overseeing a crucial phase of innovation, while dedicating less time to Twitter. This news delighted Tesla shareholders, who believe that Musk’s continued leadership will be beneficial. Analysts at Wedbush predict that Musk will retain his position as Tesla’s CEO for at least another five years.
Part of this crucial phase is the production of the company’s long-awaited Cybertruck. The company forecasts 500 units this year and perhaps 50,000 – 75,000 in FY24. Musk reiterated that Cybertruck would be both expensive and involve a very challenging manufacturing ramp. He also stated that the 4680 cells used in the vehicle were “very difficult to do” but that the company sees a “path” to meeting its design objectives of higher energy density and lower cost.
Musk did not announce any new products Tuesday, saying “this is not the time.” However, he did tease an announcement of two new vehicles based on a low-cost platform. The company anticipates that these vehicles will achieve a combined annual production of over 5 million units. This strategic move indicates Tesla’s intention to target market segments with approximately 20 million units, aiming for a market share of 25% or more. Currently, Tesla’s Model 3 and Model Y collectively hold a market share of around 20%.
During the meeting, an investor asked about a potential advertising campaign to teach more about the full TSLA story. Musk appeared to decide real-time during the meeting to try advertising its vehicles. He responded to the question saying the company will try out “a little bit of advertising”.
Wedbush analysts wrote in a note about the potential advertising campaign saying, “We view this as a major positive for Tesla as many parts of the Tesla product portfolio are undervalued by the Street with FSD a major potential value adder on top of the company’s expanding product portfolio across auto and energy as many in the general public does not know about the affordability and capabilities of TSLA products. We believe no advertising was the right strategy for Musk & Co. in the past but is no longer the best path forward as competition increases across the EV landscape. We were very pleased to see the change in stance around advertising with Musk and overall, we saw a “rejuvenated Musk” at the shareholder meeting which was noteworthy compared to a year ago.”
Musk once again stated that this would be the year for FSD, acknowledging his long history of being over-optimistic about the timeline and noting that FSD improvements are non-linear, appearing to be on track to achieve a major breakthrough before stagnating and requiring re-architecting. However, he justified his belief that this time would be different by arguing that FSD is nearing the finish line of being better than an average driver, which will in turn justify its widespread adoption.
The CEO reiterated several times that the next 12 months will be difficult for Tesla. He attributes his caution to macro issues. He pointed to rising interests rates impacting the affordability of Tesla cars, and acknowledged near-term struggles, offering platitudes like, “a friend in need is a friend indeed” and that those who are “supporting Tesla when the chips are down” are “the real friends.” He further stated that when the economy turns around in 12 months, Tesla will be in a great position.
Overall, while the CEO cited a choppy macro for the next year the shareholder meeting showcased a rejuvenated Musk and provided shareholders with confidence in Tesla’s future.
Shares of TSLA are up 1.12% in pre-market trading on Wednesday.
