Tesla faces big challenges
Tesla shares fell 6% in trading on February 11 after Chinese electric car maker BYD announced plans to develop self-driving technology with artificial intelligence startup DeepSeek.
BYD also said it would offer a system similar to Tesla’s Autopilot on most new cars, adding to concerns that billionaire Elon Musk’s electric car company is falling behind in the race for self-driving technology.
Investors are also concerned that CEO Elon Musk is distracted from other matters beyond Tesla, after it was reported that the billionaire is assembling a group of investors to buy OpenAI. At the same time, the world’s richest man is also devoting much of his efforts to work in the administration of US President Donald Trump.
Tesla’s stock price has fallen for five consecutive sessions, losing nearly 17% during that time, causing its market capitalization to plummet by more than $200 billion. At the end of the session on February 11, Tesla was priced at $328.5/share.
On February 10, BYD announced that at least 21 of its new models will be equipped with a partially autonomous driving system that includes automatic parking and highway navigation. The Chinese electric carmaker is now Tesla’s most formidable rival in the world.
Tesla has yet to introduce a robotaxi, and its electric cars still require a human behind the wheel, ready to swerve or brake at any time. Musk said last month that Tesla plans to launch “full unattended self-driving” and a self-driving car-sharing service in Austin, Texas, in June.
Alphabet ‘s Waymo subsidiary already operates robotaxi services in Austin as well as parts of Phoenix and San Francisco, CNBC reported .
Following BYD’s announcement, Morgan Stanley analysts said: “In our view, competition between Waymo, Tesla and other Chinese players will be a key driver on the path to robotaxi commercialization.”
Morgan Stanley has a buy recommendation for Tesla and a target price of $430/share, 30% higher than the closing price on February 11.
Analysts at research firm Oppenheimer have warned that the race to self-driving technology could “limit” Tesla’s ability to make money. While Tesla is on track to launch a self-driving car by June 2025, many other companies are offering similar technology, signaling that Musk’s company will have to compete on price and performance.
Is Elon Musk too distracted?
In addition to running Tesla, Elon Musk is also the CEO of SpaceX, owns social network X and leads artificial intelligence startup xAI. In recent days, he has also spent a lot of time in Washington, D.C., leading the U.S. Department of Government Efficiency (DOGE) to cut spending, government staff and regulations.
Investors have long been concerned about Musk’s growing involvement outside Tesla, and they were further perplexed after Musk’s lawyer Marc Toberoff confirmed that the world’s richest man is leading a consortium to acquire OpenAI for $97.4 billion.
Musk was one of the founders of OpenAI in 2015, when the artificial intelligence (AI) startup was founded as a non-profit research lab. Musk tried to arrange for Tesla to buy OpenAI, but the effort failed and he later left the organization.
Since then, OpenAI has commercialized a number of products, most notably ChatGPT. Co-founder and CEO Sam Altman is looking to restructure OpenAI into a for-profit company. Musk sued OpenAI to block that transition and founded xAI to compete directly.
“We view Elon Musk’s bid for OpenAI as a distraction from Tesla’s challenges,” Oppenheimer analysts wrote.
Altman told employees that OpenAI had not received a formal offer from Elon Musk, noting that the billionaire had made many statements that he ultimately failed to keep.
Oppenheimer also emphasized the risks associated with Musk actively working with the Trump administration, specifically the risk of a segment of customers losing sympathy for him and Tesla products.
