Tesla needs that car. Recall that the recent rally in the stock simultaneously took Tesla back to a 170 per cent-ish premium to the S&P 500 but kept its market value roughly $US600 billion – below the peak reached in late 2021. It is simultaneously beaten down and enormously expensive. Even if Tesla meets its medium-term growth target, at industry-beating margins, its current market cap requires sub-Treasury yield discount rates to be justifiable.

Last year’s collapse can be blamed on any number of things — not least Musk’s own massive selling — but the simplest way to think about it is option value evaporating. Belief in robotaxis and all the other master plan part deux moonshots slipping away, or at least pushed further into the future. A new, cheaper EV would reboot the story. The fact that Tesla didn’t show even a prototype on Wednesday is interesting. It’s not like they waited for a market-ready product before revealing the Model 3, the Semi or the Cybertruck.

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While Musk kicked things off with evangelism about transforming the planet, this long, meandering event ended with Zachary Kirkhorn, the chief financial officer, going through a long list of cost-saving measures and efficiency metrics. He then announced long-range capital expenditure estimates that were five times everything the company has spent to date in order to achieve, among other things, sales of 20 million vehicles a year (last year’s figure was 1.3 million). That is certainly an aspirational growth target. But it would have come better twinned with a shiny new vehicle rather than a $US175 billion spending forecast.

For a company with seemingly magical powers of narrative setting, this was just an oddly low-energy event. Even the big news that Tesla is building a big plant in Mexico — which will apparently also eventually build the next-gen vehicle — didn’t get announced until the start of Q&A, three hours in. There were so many tantalising glimpses of new platforms, tooling and other technology — and mercifully few mentions of robots. But a master plan, in terms of specific, timely objectives, it was not.

At the beginning, Musk said: “What we’re trying to convey is a message of hope and optimism.” They did, after a fashion. The problem is that the crowd is full of those emotions already, and has priced Tesla for so much more.

Bloomberg

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