Elon Musk has turned Tesla into a meme stock as he tells Wall Street to value the EV maker like an AI company, top economist says

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Elon Musk is no longer over-delivering like he used to, but he is still over-promising, according to a top economist, who pointed to the Tesla CEO’s recent insistence that his EV company should be valued like an AI company.

In a Project Syndicate op-ed published on Wednesday, UC Berkeley economics professor and former Treasury official J. Bradford DeLong gave Musk credit for creating a historically important tech company that’s the “tip of the spear in the transition away from internal-combustion-engine vehicles.”

Musk’s rocket company SpaceX also shows great promise, and he has proven to be an effective coach for engineers working on battery technologies, electric vehicles, and rocket science, DeLong added. “Without him, those technologies would not have been pushed forward as much as they have.”

In fact, while Musk has frequently over-promised, he over-delivered on those fronts, helping Tesla’s market cap and Musk’s personal wealth soar since the 2010s, DeLong said.

But more recently, he has shifted his focus from EVs, charger networks, and batteries to social media, artificial intelligence, and robotaxis.

Even as Musk vowed last month to accelerate plans to launch a new, lower-cost EV model that Wall Streets views as critical to its future, he also reaffirmed his robotaxi ambitions to develop a fleet of autonomous cars.

Meanwhile, Tesla’s surprise firing of its entire Supercharger team raised worries about the key network as well as the industry’s future. This also comes amid slower EV demand, weaker sales, broader workforce cuts, a steep stock decline, and an exodus of senior leadership.

“Yet while the over-promising has continued, the over-delivering has not,” DeLong wrote. “The fundraiser, cheerleader, and coach for teams developing real technologies has become a meme-stock carnival barker.”

He pointed to last month’s Tesla earnings conference call, where Musk exhorted Wall Street analysts to value his company more like a robotics or AI company instead of an auto company. In particular, Tesla should be viewed “almost entirely in terms of solving autonomy” and being able to apply that to a gigantic fleet of cars, the CEO added.

But DeLong noted that more than 80% of Tesla’s first-quarter sales were from automotive revenues, adding that car manufacturing has nowhere near the marginal costs of an IT company, which can write code once and run it everywhere.

“For all the current Tesla shareholders planning to offload their holdings in the next couple of years, everything hinges on the company succeeding as a meme stock, and Musk is diligently working toward that goal,” DeLong warned. “Since there are virtually no long-term Tesla shareholders, the market does not particularly care that the company lacks a CEO who is trying to build it into an enduring profit-making organization.”

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