Tesla's stock has taken a sharp downturn, plummeting nearly 17% over the past five days to $328.50, wiping out over $200 billion in market capitalization. This decline coincides with significant developments in the autonomous vehicle sector, where Chinese rival BYD announced a partnership with DeepSeek to develop cutting-edge autonomous technology. BYD plans to incorporate its Autopilot-like system into nearly all its new vehicles, intensifying the competition in the race for self-driving cars. Meanwhile, Tesla's efforts in launching a robotaxi remain forthcoming, as its electric vehicles still necessitate a human driver.
Elon Musk, Tesla's CEO, has been juggling multiple roles, including leading SpaceX, owning social media company X, and heading the artificial intelligence startup xAI. In addition to these responsibilities, Musk is also engaged in Washington, D.C., overseeing the "Department of Government Efficiency" (DOGE) as a special government employee. These diverse engagements have raised concerns among analysts and stakeholders about Musk's focus on Tesla's operational challenges.
"While [Tesla] has shifted focus to being a Physical AI play, we view Elon Musk's bid for Open AI as a distraction from [Tesla's] challenges." – Oppenheimer analysts
In the autonomous vehicle market, Tesla faces stiff competition. Waymo is already operating a robotaxi service in Austin, Texas, and parts of Phoenix and San Francisco. On the other hand, Tesla aims to launch its "Unsupervised Full Self-Driving" and a driverless rideshare service in Austin by June. The competition is not limited to U.S. companies; BYD's latest move signals a strong push from Chinese players in the autonomous driving space.
"In our view, competition between Waymo, Tesla and a host of Chinese players is a key driver on the path to commercialization of robotaxis," – Morgan Stanley analysts
Amidst these industry dynamics, Elon Musk's bid for OpenAI has added another layer of complexity to his endeavors. While Musk's attorney confirmed that he is leading a consortium of investors with a $97.4 billion bid for OpenAI, Sam Altman, OpenAI's CEO, stated that the board has not received an official offer. Altman also warned employees about Musk's history of unfulfilled claims.
"Elon has a history of making claims that don't hold up." – Sam Altman
Musk's involvement with OpenAI is not new; he previously sued to prevent its transition to a for-profit entity and subsequently started xAI as a direct competitor. These actions indicate Musk's strategic interest in the AI sector, which could potentially divert his attention from Tesla's pressing issues.
Despite the recent stock downturn and external pressures, Oppenheimer analysts recommend buying Tesla stock with a price target of $430. They perceive Tesla as one of several autonomous technology providers, suggesting that competition will hinge on price and performance.
"one of several autonomous technology providers, suggesting competition on price and performance," – Oppenheimer analysts