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Tesla Doubles Down on AI Investment Despite Earnings Miss

Tesla

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TL;DR

  • Tesla reaffirms AI commitment despite Q3 earnings miss and price cuts.
  • Generative AI holds promise for safer AVs in the automotive industry.
  • Tesla’s Dojo supercomputer could add $500 billion to its value.

In a recent earnings call on October 18, 2023, Tesla, the pioneering electric vehicle (EV) manufacturer, reported that it had fallen short of expectations in both revenue and earnings. Despite this, the company has reaffirmed its unwavering commitment to investing in artificial intelligence (AI) technology, particularly for its autonomous driving efforts.

Earnings miss and revenue growth

Tesla’s earnings per share (EPS) saw a decline of nine percent, dropping from an anticipated $0.73 to $0.66. This was a disappointment for investors who had high expectations for the EV giant. However, Tesla’s total revenue during Q3 did manage to grow by 3%, reaching $23.4 billion. It’s worth noting that this revenue growth was somewhat stymied by recent price cuts on the Model S and Model X EVs, which resulted in a 14% drop in deliveries of these vehicles.

Price cuts and revenue impact

Sammy Chan, the Europe sales forecast manager at research firm GlobalData, shed light on the impact of Tesla’s price reductions on its revenue. While the price cuts contributed to the underwhelming financial results, Chan pointed out that Tesla has more flexibility in adjusting prices compared to some of its competitors. This willingness to adapt pricing strategies underscores Tesla’s commitment to maintaining competitiveness in the EV market.

Chan also mentioned that the return of the Model S and Model X to the European market could provide a significant boost to Tesla’s deliveries in 2024. This move signifies an improvement in the company’s ability to address supply and production bottlenecks globally.

Tesla’s emphasis on AI

Despite the financial setbacks, Tesla remains steadfast in its investment in AI technology. The company’s new Dojo supercomputer, introduced in September, is expected to play a pivotal role. Morgan Stanley’s forecast suggests that Dojo could potentially add $500 billion to Tesla’s overall value.

Tesla has not only doubled the size of its AI training compute but is also channeling significant resources into its fully self-driving vehicle project and the development of humanoid robots, notably the Optimus project. This underlines Tesla’s dedication to advancing AI, particularly in the context of autonomous driving.

AI in the automotive sector

Interestingly, while Tesla is doubling down on AI, it’s worth noting that AI remains an undermentioned topic in corporate filings within the automotive sector. According to GlobalData’s business filings database, AI received only 116 mentions in July, significantly less than mentions related to EVs and autonomous vehicles (AVs).

The surge in mentions of AI in corporate filings between July and October 2022 has not been sustained, indicating that AI has yet to capture the full attention of the automotive industry. In contrast, EVs have been a more prominent topic, possibly in anticipation of impending bans on the sale of petrol vehicles in various countries, such as the UK’s plan to end petrol car sales by 2035.

The role of generative AI in AVs

In a 2023 report on AI in the automotive industry, GlobalData highlighted the potential of generative AI in enhancing autonomous vehicles (AVs). This technology can aid in route planning, optimize driving styles, and monitor road conditions. These capabilities are crucial for the development of safer AVs suitable for public use. Additionally, generative AI has applications in predictive maintenance, using vehicle data to forecast necessary servicing, which can contribute to vehicle longevity and safety.

Tesla’s optimism and future prospects

Despite the challenges and uncertainties, Tesla remains optimistic about the future. The company anticipates hardware-driven profits in the next quarter, accompanied by an acceleration in AI-based profits. Tesla’s commitment to maintaining a strong balance sheet reflects its confidence in overcoming current obstacles and continuing to lead the way in the EV and AI sectors.

Tesla’s recent earnings miss and revenue growth may have raised concerns, but the company’s resolute commitment to advancing AI, particularly in autonomous driving, remains unwavering. As AI technology continues to evolve, Tesla’s investments in this field position it as a frontrunner in the automotive industry’s quest for safer and more efficient autonomous vehicles.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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John Palmer

John Palmer is an enthusiastic crypto writer with an interest in Bitcoin, Blockchain, and technical analysis. With a focus on daily market analysis, his research helps traders and investors alike. His particular interest in digital wallets and blockchain aids his audience.

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