Tesla is the world’s most valuable car company, with a market cap of over USD 720 billion, and also the second-most valuable automotive brand (behind Mercedes-Benz). And even though its margins plummeted to a five-year low last quarter, shareholders remain bullish about the company’s prospects, especially in autonomous vehicles (AV) and robotaxis (which Tesla is slated to announce next month).
“No other company is like Tesla, solving enormously complex problems that were (and to some still are) thought to be impossible,” states investment fund Deepwater Asset Management. “Fully autonomous vehicles will take years… However, once solved, the configuration of Tesla as a business changes completely. This is the investment case for Tesla.”
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The 845 bhp Tesla Cybertruck was featured on a 2023 episode of BBC’s Top Gear with a review stating the car was “obscenely rapid… makes you insta-famous” while also noting a “lack of interior buttons or stalks, relentless attention, price than promised”. Some contend that Tesla has consistently oversold the capabilities of its self-driving software and in reality, is significantly behind the likes of Waymo (Google), Cruise (General Motors), and China’s Baidu in this domain. After all, Waymo has been providing autonomous ride-hailing services since 2018, while Baidu claims to have the world’s largest robotaxi program.
Tesla’s detractors further argue that its long-term success would ultimately be determined by how it handles quality and manufacturing challenges rather than software or autonomy.
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This is based on the fact that in J.D. Power’s 2024 Vehicle Dependability Study (VDS), Tesla was among the worst-performing brands with 252 problems per 100 vehicles (only Volkswagen, Audi, Land Rover, and Chrysler fared worse). Meanwhile, in J.D. Power’s Initial Quality Study (IQS), Tesla was the third-worst brand with 266 problems per 100 vehicles (tied with Rivian and ahead of Dodge and Polestar).
