Tesla uncertainty grows as it validates FSD, makes 'binary' bets

Shares of Tesla (TSLA) are under pressure as the Justice Department investigates whether Tesla committed wire and securities fraud by misleading investors and consumers about its electric vehicles' self-driving capabilities, Reuters reports.

Barclays Senior Autos Analyst Dan Levy joins Catalysts to give insight into Tesla and the pressure the company is under as uncertainty grows around it.

Levy explains why Tesla is headed down an uncertain path: "You have an investment thesis that's in pivot. And I think that there is uncertainty because the stock or the narrative is pivoting away from what was viewed as some certainty around vehicle sales, leveraging a cost advantage, and instead leveraging bets that people view as possibly binary. The push to autonomous, the push to robotaxi — these could be potentially largely disruptive bets, but they're binary. People just don't know what the outcome is."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino

Video Transcript

For now.We are going to go over to our guest.I believe we because Tesla's dog is under pressure following the movement that we are seeing this morning, Dan Levy is joining us here, Dan, thank you so much for being with us.I hope that you were able to hear great commentary on this.And he was talking about the question about whether or not this really is fraud.So I'm curious from your perspective, Dan, to what extent are you concerned that this could be fraud from Tesla?Yeah, good morning.Thank you for, for having me.I I think that broadly for, for Tesla and, and you know, I won't comment to, to the report itself.I think Tesla right now is in the process of validating and demonstrating the capabilities of, of FSD.Uh Obviously, you know, there one side of this that we're well aware of is consumers and consumer uptake and getting consumers to appreciate it.But on the other side of it is the regulatory front.And um you know, in general, we view the regulatory side as a risk that needs to be monitored.Uh It's one where so far Tesla has been able to keep the functionality that they have out there.But the the functionality, but the regulatory side is a risk that certainly does need to be monitored on FSD prompt.Then just give me your sense right now of Tesla, how it is positioned following the run up that we have seen since earnings and the current valuation of the stock right now, given some of those macro concerns that you were just talking about.How big of a risk do you see that potentially being here?Then to the downside, there's a lot of uncertainty for Tesla right now.Um from a fundamental standpoint, things are obviously a bit more challenged.I think people are well aware that ev demand is pressured.Their, their, their demand is is under pressure.We obviously saw that with a very soft one Q volume estimate.At this point, people are forecasting volume to be largely flat, we flat on the year which you know, was one sort of an unthinkable thought for, for Tesla to have flat volume on what should have been, you know, very robust growth.So the fundamental side is is challenged on the other side of it, you have uh an investment thesis that's in pivot.And I think that there is uncertainty because the stock or the narrative is pivoting away from what was viewed as some certainty around vehicle sales leveraging a cost advantage and instead leveraging bets that people view as possibly binary, right?The push to autonomous, the push to Robo taxi, these could be potentially largely disruptive bets but they're binary.You know, people just don't know what the outcome is.And so that's why I would say there's an air of uncertainty, right?And people are maybe buying the story about full self driving versus the reality of it being here.But I wanna get your take on the robo taxi here as well.Does today's news change what we might be anticipating from the Robo taxi moving forward?Well, I think we're, you know, I don't know that this, this really changes the narrative.I think we're, we're waiting for a couple of key things on Robo taxi.One is certainly as it relates to today, you know, any updates on the regulatory front, but we're waiting to see, you know, any updates on, on tape rates.Uh and then we have an A G coming up uh which is a key event to watch for.And then certainly August 8th is the Robo Taxi launch.Um You know, and, and clearly this narrative needs to play out both from the FSD side, which is more of a, you know, we view to the driver assist functionality as well as the fully driverless technology that Tesla has, you know, alluded to, but really hasn't given us much meat on the bone