It’s been an action-packed start to the month for Tesla (NASDAQ: TSLA) shares. On 2 April, the electric vehicle (EV) pioneer announced disappointing Q1 delivery numbers and the stock dropped 6%.
Then on 5 April Reuters reported that Tesla had scrapped plans for its mass-market Model 2 car. This also sent the stock down. However, after Elon Musk accused the news agency of “lying“, the share price rebounded.
If all that wasn’t enough, Musk then said the firm will unveil its long-promised robotaxi on 8 August.
So, last week was dramatic, even by Tesla’s colourful standards. What to make of all this? Here are my thoughts.
Weakening sales
In Q1, Tesla delivered a total of 386,810 EVs, down from 422,875 in Q1 last year. That was a wide miss as the consensus expectation was for 454,200 cars.
Clearly, higher interest rates are a major headache for the business. Most people buy new cars on finance and that has become more expensive to do.
Tesla’s cheapest current vehicle, the Model 3 sedan, sells for about $39,000 across the pond. So the firm’s sales are slowing as consumers continue to put off big-ticket purchases.
We don’t know how long this EV slump will last. This is an ongoing concern.
Robotaxis
That’s why reports that Tesla might be axeing its planned mass-market $25,000 vehicle were noteworthy. This car was widely expected in the latter half of 2025, and could have boosted sales significantly.
One major challenge, however, is that the firm faces stiff competition from Chinese firms operating in the affordable EV category. Some in China are priced as low as $10,000!
Therefore, the robotaxi announcement is interesting. These self-driving vehicles apparently won’t have a steering wheel or pedals and are designed for a ride-hailing service.
This would be a totally different ballgame to its existing Autopilot and Full Self-Driving driver-assistance systems. While the latter is sold to US customers for $12,000 upfront or as a $199 monthly subscription, it’s not considered autonomous.
Again though, there is already competition here in the form of Alphabet‘s Waymo. This unit has been testing its autonomous cars in select US cities for a while now. And it has signed a multi-year partnership with Uber Eats for driverless food deliveries in Arizona.
To me, Tesla’s robotaxi service is a gigantic potential market, but it still seems many years away. It’s a similar story with the Optimus humanoid robots.
Long-term picture
Despite falling 30% year to date, Tesla stock still isn’t cheap — when is it ever? It’s trading on a forward price-to-earnings (P/E) ratio of 54. This potentially adds risk.
As a shareholder though, I’m still bullish on the stock long term. That’s because EVs today still make up a minority of cars on the road.
Meanwhile, Tesla is reportedly considering a $3bn factory in India, which could become a massive new market. And there’s the often-overlooked energy storage business, which is still growing.
Looking ahead, if Tesla can make vehicle autonomy work, it could leverage this technology to make Optimus a success (both are based on computer vision).
This year could be a bumpy ride. But the long-term opportunity still appears intact to me. If the stock drops anywhere near $150, I think I’ll buy more shares.
The post Should I buy, sell or hold Tesla shares after the ‘robotaxi’ announcement? appeared first on The Motley Fool UK.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Ben McPoland has positions in Alphabet and Tesla. The Motley Fool UK has recommended Alphabet, Tesla, and Uber Technologies. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
