The Tesla (NASDAQ: TSLA) share price popped 11.9% to $278 on the Nasdaq Composite index Monday (24 March). Despite this, the stock remains around 41% lower than three months ago.
What caused this rapid acceleration skywards? And is it game-changing news that makes me want to invest in the electric vehicle (EV) giant? Let’s take a look.
What’s going on?
From what I can gather, there appears to be a few reasons for the share price jump. For starters, it was a great day for all tech stocks as it emerged that President Trump’s stance on tariffs might be softening. Some reciprocal tariffs that were meant to go ahead on 2 April might not now happen. In response, the tech-heavy Nasdaq jumped 2.27%, as easing fears of a global trade war reassured investors.
Second, Reuters reported that Tesla’s paused Full Self-Driving (FSD) feature in China would now be released following regulatory approval.
In January however, CEO Elon Musk said Tesla was in “a quandary” in China. The country doesn’t allow the firm to transfer training videos (ie data) abroad, while US policies restrict AI training within China. So Tesla’s working with tech firm Baidu to advance its FSD system there.
Despite the name, Tesla’s FSD isn’t truly autonomous. The driver must still remain attentive and in control at all times.
Game-changing news?
I’m not taking the latest tariff news too seriously. Trump’s policies seem to change by the day, and I risk whiplash trying to keep up with the latest developments. For me, the game-changing news will be when Tesla finally deploys robotaxis and they’re safely ferrying paying customers around. We still don’t know when that will be (genuine FSD was originally meant to be 2017).
Having said that, if Tesla can pull it off, it would be a huge deal. That’s because its vision and AI-based approach could give it an incredible scalability advantage. By skipping detailed mapping and LIDAR approaches, Tesla could theoretically roll out self-driving capabilities globally with far less effort than rivals.
But there is a serious risk that the technology isn’t ready yet. So the stakes are very high for Tesla, but high stakes are exactly what gets Musk out of bed in the morning.
Should I buy Tesla stock?
Speaking of Musk in the morning, where does he head after breakfast these days? Is it Tesla? SpaceX? The offices of social media platform X or one of the other start-ups? For now, it seems to be the Department of Government Efficiency (DOGE), a demanding role that he says is making it “very difficult” to run his companies.
My fear here is that Musk is spreading himself too thinly at a critical time for Tesla. Competition’s mounting, especially from Chinese EV giant BYD, and Trump’s administration will likely abolish EV subsidies. Meanwhile, sales have reportedly been falling sharply across Europe this year.
Even after the recent crash, the stock’s far from cheap. It’s still trading at 100 times sales and 136 times earnings. That’s an extreme valuation that assumes robotaxi success.
Given these challenges, I would want Musk at the helm full time if I were a Tesla shareholder. Because he doesn’t seem to be there right now, I have no intention of investing.
This post was originally published on Motley Fool
