Tesla, Inc. (NASDAQ: $TSLA) is a pioneering EV maker that has revolutionized the automotive industry.
It is currently embroiled in a major legal battle over the safety of its Autopilot feature. As jury selection begins this week, the family of a former Apple engineer who died in a 2018 crash while Autopilot was engaged has filed a wrongful death suit against the company.
The Fatal Crash and Autopilot Concerns
On March 23, 2018, Walter Huang was killed when his Tesla Model X crashed into a concrete highway median in Silicon Valley. The National Transportation Safety Board found that the car’s Autopilot was active for about 19 minutes before the crash on the highway. The car was traveling at 71 mph before it veered off the road.
The Huang family asserts that Tesla misrepresented the capabilities of its Autopilot technology and that it is not as safe to use as advertised. The trial marks another crucial moment for the embattled company, which has faced intense scrutiny over the safety of its Autopilot system.
Autopilot Under Scrutiny
The NHTSA and the NTSB have raised concerns regarding the autopilot system. After a two-year investigation analyzing 1,000 Tesla crashes with Autopilot engaged, the NHTSA found that the system can give drivers a false sense of security and be easily misused in certain dangerous situations.
In response, Tesla recalled all 2 million of its cars in the United States, providing drivers with more warnings when Autopilot is engaged and they are not paying attention to the road or keeping their hands on the wheel.
Tesla’s Defense and Robotaxi Ambitions
Tesla maintains that Autopilot technology is safe when used correctly and reduces fatalities. The company said Huang was responsible for the crash at the time because “the driver’s hands were not detected on the wheel for six seconds prior to the collision.” They also claim that he was on his phone when the crash occurred.
Meanwhile, Tesla CEO Elon Musk has been vocal about the company’s plans for its Robotaxi project, which is set to be introduced on August 8. Analyst Tasha Keeney of ARK Invest acknowledges the progress in Tesla’s self-driving software but notes that the release of the Robotaxi will depend on when the necessary software updates are ready.
Tesla Faces Quarterly Delivery and Production Decline
On April 2, Tesla announced delivery figures for the first quarter of 2024, shedding light on its performance amidst various challenges. The company disclosed that it delivered 386,810 vehicles worldwide during this period. This figure includes 369,783 units of its popular Model 3 and Model Y vehicles and 17,027 Model S and Model X units. However, this marks an 8.5% decline compared to last year’s quarter, representing Tesla’s first Y/Y decrease in quarterly deliveries since 2020.
The delivery decline is attributed to multiple factors, including production challenges with the updated Model 3 at Tesla’s Fremont factory, alongside plant shutdowns caused by Red Sea conflict shipping diversions and an arson attack at Gigafactory Berlin. These disruptions led to a weeklong production halt at Tesla’s German facility, affecting overall output for the quarter.
Tesla’s total production was 433,371 vehicles during the first quarter of 2024, including 412,376 units of the Model 3 and Model Y and 20,995 units of the Model S and X, a 1.7% decline Y/Y.
Tesla’s Financial Performance and Projections
Tesla’s financial outlook shows a decline in earnings, with expectations of $0.57 per share for the current quarter, down 32.9% from last year. Analysts project a -5.8% change for the current fiscal year but anticipate a +28.4% increase for the next fiscal year.
Revenue estimates for the current quarter are $23.97 billion, reflecting a +2.7% year-over-year growth. Forecasts for the current and next fiscal years are $108.97 billion and $128.18 billion, respectively, indicating increases of +12.6% and +17.6%.
In the last reported quarter, Tesla recorded $25.17 billion in revenues with an EPS of $0.71, down from $1.19 EPS a year ago. Tesla slightly missed revenue estimates by -2.97% and EPS estimates by -5.33%. While surpassing EPS estimates twice in the last four quarters, it exceeded revenue estimates only once.
Tesla Stock Update
As of Monday, April 8, Tesla’s (TSLA) stock stands at $172.77, marking a 4.77% rise from its last close at $164.90. Over the past month, Tesla shares have declined by 6%, contrasting with the S&P 500’s 1.65% gain during the same period.
Looking at its performance over the past year, Tesla has shown a change of -10.63%, while the S&P 500 has experienced a 52-week change of 26.65%. Tesla’s 52-week high is $299.29, and its low is $152.37. Its trailing P/E ratio is 38.34, while its forward P/E ratio is 54.64.
Tesla: Analysts Predictions and Recommendations
Over the past three months, 35 Wall Street analysts have shared their insights on Tesla’s future performance, particularly its 12-month price targets. The consensus among these experts suggests an average price target of $196.72, with a high forecast of $320.00 and a low forecast of $23.53. This average projection reflects a 13.68% change from Tesla’s most recent price of $173.04.
Among the analysts surveyed, 9 recommend purchasing Tesla shares, while 19 advise holding onto them.
Should You Invest In Tesla Stock?
The legal battle over Tesla’s Autopilot feature underscores broader concerns regarding technology’s role in road safety. The tragic crash involving Walter Huang highlights the imperative for rigorous scrutiny of autonomous driving systems and the responsibilities of both drivers and manufacturers. Tesla’s recent delivery decline and production challenges further underscore the company’s complexities amidst geopolitical tensions and operational disruptions.
Despite fluctuations in financial performance and stock values, analysts offer varying predictions for Tesla’s future trajectory. As the company navigates legal, operational, and market challenges, it stands at a critical juncture where addressing safety concerns, managing production disruptions, and maintaining investor confidence are paramount for its sustained success and advancement in the automotive industry.
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