Today, electric vehicle leader Tesla may have its worst quarterly earnings in seven years, but investors are more concerned about the company's strategic shift.

Dragged down by slowing demand and a “price war,” Tesla's stock price has continued to fall and sales data has not performed well since this year. The market seems to have absorbed the disappointing expectations of the company's quarterly report and is instead focusing on a new question — how will Tesla position itself: become a major electric vehicle manufacturer or transform into a small supplier focusing on autonomous driving technology?

According to previous related reports, Tesla plans to abandon the development plan for the cheap model Model 2 and shift its focus to developing Robotaxi. Although Musk later denied changes to the Model 2 plan, he also stressed that focusing on autonomous driving technology is an obvious direction for the company's future development.

James Anderson, managing partner at Lingotto Investment Management said:

“For them, the dispute between profit and sales volume is a long-term theme, and the company's strategic transformation will be an important point.”

“The success of this strategic shift will depend on the development of autonomous driving technology.”

As one of Tesla's top 15 shareholders, Baillie Gifford's Tom Slater believes that while Tesla's sales may be relatively calm this year, investors will be optimistic about the potential of its autonomous vehicles. He stated:

“If you take a look at all the reviews of their latest version of the fully automated driving software (FSD), you'll see that's a huge leap forward.”

Another shareholder, Gary Black, managing partner of The Future Fund, said:

“Our company's actions will largely depend on how Musk will schedule the Model 2. Currently, we expect production of this model to begin in 2026, after Robotaxi.”

On the other side, institutional views seem generally pessimistic. Barclays analyst Dan Levy predicts Tesla's upcoming quarterly results will be unsatisfactory, may show the lowest gross profit margin since early 2017, and anticipates the first negative cash flow since early 2020.

Deutsche Bank analyst Emmanuel Rosner warned that Tesla's strategic shift could cause a potential shift in the investor base:

“Investors who previously focused on Tesla's electric vehicle sales and cost advantages may give up and be replaced by longer-term AI/ technology investors.”

Rosner also emphasized that all in autonomous driving has considerable risks.

edit/ruby