Tesla’s third quarter deliveries came in below Wall Street’s expectations, only adding to the mounting pressures facing the auto industry. Tom Narayan, RBC Capital Markets lead equity analyst of global autos, sits down with Market Domination Hosts Julie Hyman and Josh Lipton to dig into Tesla’s (TSLA) delivery numbers and where the company stands going forward. Narayan outlines his view that Tesla’s subpar auto sales don’t actually matter, explaining that the “car business for me is less, like 5% of my [Tesla] valuation. They need to sell cars to sell [full self-driving] FSD and everything else. But I think folks are going to start looking at the bottom line more on gross profit. You’re going to have regulatory credits, which surprised a lot of people last quarter. It’s going to be good this quarter again and next year. And energy storage, people are finally talking about this. We saw the number that they printed today wasn’t as good as last quarter, but way bigger than the run rate of last year. So I think folks are going to stop looking at the delivery numbers so carefully. And start looking at gross profit. And it’s going to look pretty good.” He says the highly-anticipated robotaxi is “half of my entire valuation, as you know. I’m a big believer in the robotaxi concept. The difference, though, between this event and what they held in the Power Day a few years ago, where the stock was up quite a bit, is Power Day was more real now, whereas I think robotaxis are a little bit farther away. That’s why I think it might be difficult to get crazy excited, at least a stock to react the way it will be. I think it did into it, but I do think you’ll get a lot of people like me writing big reports finally with real numbers and putting it in their models. That might help. But again, this is far into the future, so I just don’t know how much it’s going to impact.” The long horizon for Tesla’s robotaxi isn’t a tech issue but rather a regulatory issue. “We all saw what happened with GM Cruise having to pull away and now starting to tip their toe back in. Cities are going to have to completely re-engineer themselves… It’s a very human-driven thing, let’s put it that way. You’re making decisions all the time. And so it’s going to take a while for regulators to be okay with that.” The analyst offers his perspective on the Cybertruck and the model’s role in the Tesla brand. “I don’t think it’s a real game-changer. If anything, they’re losing money on it, but it is trying to get excitement back into the brand, which maybe they lost a little compared to where they were. But really, ultimately, this is a halo car that hopefully lifts their brand.”
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