Tesla's Stock Rises Despite Challenges with Full Self-Driving Technology

Tesla Inc. (NASDAQ: TSLA) experienced a notable increase of over 3% during pre-market trading on Thursday. This surge occurred even after the company fell short of revenue expectations for the fourth quarter. Additionally, CEO Elon Musk acknowledged that existing Tesla vehicles equipped with the HW3 computers would require hardware replacements to fully utilize the Full Self-Driving (FSD) capabilities.

Market analyst and Tesla bear from GLJ Research, Gordon L. Johnson, raised concerns regarding Musk's admission that HW3 vehicles cannot completely leverage FSD technology. He pointed out a significant underlying issue: how can Tesla assure that FSD will work with upcoming hardware versions such as HW4 or HW5?

Johnson highlighted, "This is a huge deal, as TSLA promised that all its cars since 2016 were equipped with the hardware necessary to support FSD. Many financial analysts are currently valuing Tesla's HW3 cars at billions of dollars, based on the expectation that these vehicles will generate substantial revenue through FSD robotaxi services." He emphasized that approximately 80% of Tesla's cars on the road are equipped with HW3, indicating a potential problem for the company.

Why It Matters: On Wednesday, Tesla reported earnings, revenue, and gross profit margins for the fourth quarter that did not meet market expectations. However, the stock's positive movement in pre-market trading can be attributed to the company's plans to initiate production of new models aimed at more affordable price points, thereby enhancing its product lineup.

Price Action: Following a 2.3% decline on Wednesday, Tesla's stock rose more than 3% in pre-market trading. Notably, Tesla's shares have performed impressively over the past year, with a remarkable increase of 103%, as indicated by data from Benzinga Pro.

For further insights into the future of mobility, additional resources are available.

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Tesla, FSD, Stock