Tesla Motors Stock Faces More Risk from Advanced Autopilot
Tesla Motors Inc (NASDAQ:TSLA) has not had its best year on Wall Street. Tesla stock has dropped over 14% year-to-date (YTD). There is the sense that investors have become somewhat—not fully, mind you—more realistic about Tesla’s plans.
Tesla stock was always rather flamboyant in its valuation. But, quipped defenders, Tesla’s cars represent the future. There is little question that one day, and not too far away, electric vehicles (who knows if we might even speak of “cars” any longer) will dominate.
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The internal combustion engine will maintain a special place among enthusiasts, who will run their “vintage” cars along special road circuits and tracks, just as horse riders do today. Electric is the future. But those who propelled Tesla stock to impossible valuations—compared to other auto manufacturers—must wonder how this bounty run might last.
There are reasons for concern. Tesla Motors is pushing risky technologies at a pace that the market and the infrastructure cannot manage. Indeed, Tesla’s insistence on launching overly “able” driverless systems now—in the reality of modern traffic—has become a major risk to the company.
Today, the lucky owners of a Tesla “Model S” and “Model X” can look forward to an improved “Autopilot.” It would have been better for these same owners to benefit from energy-saving software to improve range. Still, self-driving systems are what Tesla is pushing these days. It’s not unreasonable to suggest that self-driving technology represents Tesla stock’s main risk.
In one of his frequent tweets, Elon Musk, CEO of Tesla Motors, informed a Tesla Model S owner that the next major Autopilot update will be released in about three weeks. The upgrade will not release all new functions at once; they will be distributed throughout 2017.
Owners can look forward to features such as “Autosteer.” This allows the car to recognize traffic signals and automatically position itself at the center of the right lane using cameras already installed in the cars.
But driverless features have gotten Tesla into trouble a few times already in 2016. There have been accidents, some deadly, attributed to drivers using driverless systems irresponsibly.
Credits: Flickr.com/John Bragg
It’s Almost as if Tesla Motors Is Using Current Owners as Guinea Pigs for Its Driverless Technology
Mercedes Benz (owned by Daimler AG (FRA:DAI), for one, has worked on driverless systems since the 1980s. It has been offering them on its premium models, but not all at once.
Mercedes has the technology, hardware, and software to run fully autonomous cars—even autonomous trucks, for that matter. However, Mercedes has been making cars for over a century. It understands that the limits are human. Thus, it has not offered the same level of autonomy; it’s too risky.
Tesla Motors should pay more attention to getting the “Model 3” out because it’s only a matter of months before Tesla will drown as other major car manufacturers start offering their own electric vehicles. General Motors Company (NYSE:GM) is about to launch the “Chevrolet Bolt,” which is long on practicality and full electric power, if not style.
Tesla stock has to find a way to become independently profitable, rather than relying on government-mandated carbon credits. It’s good to be a visionary. That is why Elon Musk’s other project, SpaceX, is private.
As a public company, Tesla Motors should pay more attention to risks. Even an improved Autopilot, in a world where 99.99% of vehicles—and some pedestrians as well—are not “smart,” carries considerable risk.
