The Aryavarth Express
Agency (New Delhi): Elon Musk’s surprise visit to China, following his cancelled trip to India, has sparked controversy in Indian business circles. Many view it as a snub to India, prioritizing the massive Chinese market for Tesla. However, there might be more to the story. Recently, the US Secretary of State received a cool reception in China. He was received by some polit bureau members on his arrival in Shanghai. There was no red carpet for him to walk the tarmac.
When Chinese President Xi Jinping met Blinken, he was reportedly overheard asking a staff when Blinken was going back to his country. This suggests China may be using “track two diplomacy” – engaging with influential figures like Musk – to bypass official channels. This approach grants Musk access to Chinese funding, potentially a crucial factor for Tesla’s current needs.
Tesla’s first-quarter results were a mixed bag. The company faced a slowdown in electric vehicle sales, leading to a 9% decline in deliveries and a 13% drop in automotive revenue to $17.4 billion. Overall revenue also dipped 9% to $21.3 billion. Earnings per share fell sharply by 47% to $0.45, and Tesla experienced a concerning $2.5 billion cash outflow.
Despite these setbacks, Tesla’s stock price defied expectations and surged by 12%. This unexpected jump could be due to investor confidence in Tesla’s long-term prospects or a positive reaction to the company’s plans to ramp up production of lower-cost vehicles.
Tesla is making a huge leap forward in self-driving technology with a $10 billion investment in artificial intelligence (AI). This investment, according to Fortune, is specifically targeted towards improving Tesla’s self-driving capabilities and development of robotaxis. In a post on X, Musk emphasized the importance of AI investment, stating that Tesla will dedicate $10 billion this year to training and implementing AI, primarily for in-car applications. He believes companies that don’t invest heavily and efficiently in AI will struggle to compete.
Musk’s hefty investment underscores AI’s critical role in the future of automakers. He challenges competitors, claiming they must invest similarly and efficiently to stay relevant. This move signals a heated race for AI dominance in the car industry, raising the bar for competition.
During the first-quarter earnings call, Elon Musk challenged investors to view Tesla as an AI and robotics company, not just a traditional automaker. He emphasized that Tesla’s success hinges on solving self-driving technology (referred to as “autonomy”), and those who doubt this vision should reconsider their investment.
Musk highlighted progress with Tesla’s FSD V12 self-driving software, deployed in roughly 1.8 million vehicles on the road, with half of owners actively using it. However, his true ambition lies in creating a vast fleet of “robotaxis” or “cybercabs.” The company hinted at a “revolutionary ‘unboxed’ manufacturing strategy” to dramatically reduce production costs for these robotaxis. Expect a major unveiling of Tesla’s robotaxi strategy in August.
Tesla’s ambitious plan hinges on a massive fleet of robotaxis, also called “cybercabs.” To achieve this, the company is developing a “revolutionary ‘unboxed’ manufacturing strategy” to significantly reduce production costs. A major unveiling of this robotaxi strategy is planned for August.
But Musk isn’t content with just self-driving taxis. He envisions a future where Tesla’s immense fleet, boasting millions of vehicles with powerful computing capabilities, doesn’t sit idle. This is where “distributed inference” comes in. Essentially, Musk proposes using parked Tesla vehicles to run complex AI models, creating a vast, distributed network. Imagine the processing power harnessed with 100 million Teslas on the road!
Musk envisions a future similar to Amazon’s dominance in cloud computing (AWS), where Tesla leverages its vast fleet as a distributed AI network. Just like Amazon’s beginnings as a book retailer, this could be a game-changer.
However, Musk’s plan faces hurdles. Ownership is a key concern – Tesla doesn’t control vehicles once sold. Additionally, AI computing is energy-intensive, raising questions about economic viability and who shoulders the cost. Tesla-owned robotaxis address some of these issues, but urban areas with potentially high electricity prices may pose another challenge.
Elon Musk makes a compelling point: Tesla’s sky-high valuation (over 55 times forward earnings and over 5 times sales) positions it more as an AI and robotics play than a traditional automaker. This is especially true when compared to established car companies like Ford and GM, or even struggling EV startups.
The key to Tesla’s future might lie in its transformation into an AI and robotics leader. Investing in Tesla becomes a bet on Musk’s vision for the future, where electric vehicles are just the first step. While some of his ideas might not materialize, successful execution on a large scale could propel Tesla’s stock significantly. (IPA Service)
By Arun Kumar Shrivastav
