Don’t hold your breath waiting for Tesla Inc‘s TSLA much-hyped Optimus humanoid robot, as skepticism arises post-earnings report, with an analyst questioning its viability and existence.
Gordon Johnson, analyst at GLJ Research, was talking on Benzinga’s PreMarket Prep about Tesla’s underwhelming earnings report, delivered on Wednesday after the market close.
When asked about the company’s recent unveiling of a humanoid robot, he said: “We now know it was a fake – there was a guy out of shot on the video controlling it – Where are we at with humanoids? I don’t think it’s ever coming.”
He added: “Elon Musk comes up with a lot of these products that are years out, but he doesn’t execute on them. It’s not like he promises and delivers late, he doesn’t deliver at all — but there’s always this carrot that he puts out there.”
Also Read: Tesla’s Next-Gen Vehicle: What We Learned From Q4 Earnings Call
Weaker Demand For EVs
It’s worth noting that Johnson is an outspoken Tesla critic, and he was more downbeat on Tesla’s earnings than most, even though the results were in-line with his bearish expectations.
The key point to note from Tesla’s results, Johnson said, was that in previous reports the company had said it would grow 50% annually, which it removed from the current statement following growth of just 37%. Other key indicators to watch, he added, were falling margins and increasing tax rates.
When asked whether slowing consumer activity was a headwind for Tesla in 2024, Johnson answered, “No – that’s just something Elon Musk is saying to shield himself from weak demand for Tesla cars specifically.”
“Demand for internal combustion engine cars is still strong – demand for cars that people want is still strong. The reason why investors are exiting the EV space is simple: it’s because they’re not profitable.”
“Think about this – Telsa’s net margin in Q4 was 7.9% — they just told you their tax rate is going from 8% to 25% — and they’ve already done a price cut in 2024 of 5%. They are now a profitless EV manufacturer,” Johnson said.
He cited the examples of carmakers such as Ford F, General Motors GM and Volkswagen VWAGY pulling back billions of dollars they’d planned to invest in electric vehicles.
“It’s just not profitable,” he added.
Next Generation Vehicle
Johnson was also critical of some of the details on the earnings report that other considered positives. Including the next generation model, an entry-level vehicle to be marketed at around $25,000.
“It’s not coming out until 2025 — so you’re talking about two years with no new models, stale models, low volume production.”
Meanwhile, with indefinite delays to the construction of a new production facility in Mexico, Johnson was also concerned about rising costs. While Tesla workers are not affiliated with the powerful Auto Workers Union, which won large pay increases for workers at Ford and GM last year, there are concerns that pay increases could further undermine Tesla’s profitability.
“They’re going to produce that $25,000 car in Texas. Texas is a high-cost production market — you’re paying your factory workers in Texas roughly $50 an hour vs. $10 an hour in Mexico or $5 an hour in China,” Johnson said. “There’s no way, in our view, that that car is going to be competitive if they make [it] in Texas.”
“It’s very bad long term because this is a stock that’s valued at 100 times our 2024 earnings per share estimate, and we think earnings growth is going to be negative – that’s absurd.”
Images: GordonJohnson/GLJ-Research.com TeslaLogo/Wiki Tumisu/Pixabay
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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