A Wall Street analyst has suggested that electric vehicle (EV) manufacturer Tesla (NASDAQ: TSLA) may be entering an era of “gimmicks,” losing focus on its core business following the launch of its robotaxi service in Austin.
According to Gordon Johnson, Tesla’s core EV business is in structural decline, and the company is increasingly leaning on headline-grabbing tech demonstrations to distract from deeper issues, he said in an X post on June 28.
The analyst believes that as Tesla’s core operations weaken, the company will likely ramp up promotional spectacles and futuristic tech promises to maintain market attention.
In his view, the more Tesla relies on future projections while current performance lags, the more visible the company’s underlying cracks become.
Regarding the Robotaxi rollout, Johnson argued that the technology doesn’t work as promised and that unveiling it prematurely only strengthens bearish views about the company’s future.
Robotaxi launch scrutiny
Notably, Tesla’s robotaxi debut on Sunday has already drawn scrutiny from federal regulators after test vehicles committed notable errors, including wrong-lane driving, abrupt stops, unsafe passenger drop-offs, and even collisions with curbs.
Despite having human safety monitors on board, the demonstration did little to dispel concerns about the readiness of its Full Self-Driving (FSD) system.
This comes as Tesla continues to struggle in the market, facing declining sales and mounting pressure from lower-cost Chinese manufacturers.
Financially, Tesla’s automotive gross margin fell to about 16% in the first quarter, down from a pandemic-era high of 25%. The company has leaned heavily on price cuts and zero-interest financing to boost volume, but these strategies have come at the expense of profitability, raising concerns among analysts.
Further complicating Tesla’s outlook is shifting public sentiment, as CEO Elon Musk’s increasingly polarizing public image, shaped by controversial social media activity and political disputes, has eroded goodwill among some investors and consumers.
Tesla stock price analysis
Meanwhile, after receiving an initial boost from the robotaxi launch, Tesla stock has since retraced. At the close of the last market session, TSLA was trading at $323, down 1.4%. Over the past week, the share price has declined 1.2%.
As it stands, Tesla stock needs to hold above the $300 support level. If the company can reassure investors about the safety of its robotaxi, the stock has a strong chance of targeting the $400 mark.
Featured image via Shutterstock
