Investor Ross Gerber, co-founder of Gerber Kawasaki, has issued a pointed critique of Tesla Inc. CEO Elon Musk following a notable decline in the company's stock price. In a post on the social media platform X, Gerber suggested that Tesla should 'consider selling EVs again,' implying that the company has strayed from its core business of electric vehicles in favor of ventures like artificial intelligence and chip manufacturing.

Ross Gerber's Critique

Gerber's comments reflect growing impatience among some investors who believe Tesla's focus is misaligned. 'Maybe Tesla should consider selling EVs again… It’s a wonderful business,' Gerber wrote. The investor, who has been vocal about Tesla's strategy, argues that while Musk pushes into autonomous driving, robotaxis, and AI systems like Dojo, the company has neglected the development of new electric vehicle models. This, Gerber suggests, is a primary reason for the stock's recent poor performance.

Gerber Kawasaki is known for its tech-heavy portfolio, and Ross Gerber has been a long-time Tesla bull. However, his tone has shifted in recent months as Tesla's market share faces pressure from competitors like BYD, Rivian, and legacy automakers ramping up EV offerings. The critique comes at a time when Tesla's valuation has been under scrutiny, with its price-to-earnings ratio remaining high despite falling sales growth.

TSLA Stock Performance

As of late June, Tesla's stock has experienced a significant decline. Since May 26, the shares have fallen more than 13%, with a drop of nearly 6% since June 18. The stock reached a high of $442.10 per share during the past month but traded around $374.40 in after-hours trading on Thursday, down 0.19%. The broader market has also been volatile, but Tesla's decline is steeper than many of its tech peers.

Factors contributing to the downturn include concerns about slowing EV demand, price cuts that compress margins, and a perception that the company's next growth driver—the robotaxi network—is still years away from meaningful revenue. Additionally, Musk's acquisition and rebranding of Twitter (now X) has drawn management attention away from Tesla, raising governance concerns among investors.

Tesla's Strategic Shift

Under Musk's leadership, Tesla has expanded beyond automotive into energy storage, solar panels, and AI. The company has invested heavily in building a supercomputer for training autonomous driving models and has sold software like Full Self-Driving (FSD) as a high-margin revenue stream. However, critics argue that these distractions have slowed the launch of new vehicles. Tesla's current lineup—the Model 3, Model Y, Model S, Model X, and Cybertruck—has not seen a fresh mass-market model since the Model Y in 2020.

During the company's 2023 Investor Day, Musk outlined a master plan that included a next-generation vehicle platform, but details have been sparse. Reports suggest Tesla had been working on an affordable EV targeted primarily at the Chinese market, potentially with production at its Shanghai Gigafactory. This model could also be sold in the U.S. if costs allow. However, Musk has hinted that the robotaxi and its dedicated vehicle—the Cybercab—may take precedence, further delaying the affordable car.

The Affordable EV Question

Gerber's critique aligns with a broader investor concern: that Tesla is missing the mass-market EV opportunity. While the Model 3 and Model Y have been wildly successful, their starting prices remain above $40,000 in many markets, making them less competitive with sub-$30,000 EVs from Chinese manufacturers like BYD. The Cybertruck, meanwhile, is a niche product starting at $60,000 and has faced production challenges.

If Tesla were to launch a truly affordable EV—priced around $25,000—it could reignite volume growth and counteract the stock's decline. Gerber himself has praised Slate Auto, a startup backed by Amazon's Jeff Bezos, which plans to sell a modular EV pickup truck for about $25,000. 'People will totally love this truck,' Gerber posted on X, highlighting the demand for lower-priced EVs.

Robotaxi Rumors and Gary Black's Dismissal

Adding to the narrative, investor Gary Black of The Future Fund LLC has dismissed rumors that Musk is deliberately delaying the robotaxi ramp to force a merger with SpaceX after its blockbuster IPO. According to Black, such speculation is unfounded and distracts from real issues like competitive pressure and execution risks. Tesla's robotaxi program promises a network of autonomous vehicles generating recurring revenue, but regulatory hurdles and technological challenges remain.

Black argues that Tesla's growth story still hinges on vehicle sales and energy. He points out that Tesla's market cap is over $600 billion, far exceeding that of traditional automakers, implying investors are pricing in significant future earnings from autonomy. However, without clear progress, the stock may continue to suffer.

Gerber's Support for Slate Auto

Ross Gerber's enthusiasm for Slate Auto underscores the competitive landscape. Slate's pickup truck offers 201 miles of range in its base 'Slate' guise and features a modular design allowing customization. At $25,000, it undercuts Tesla's cheapest Model 3 by roughly $15,000. While Slate is still pre-revenue, its approach resonates with consumers seeking affordability and practicality.

Gerber's backing of a startup competitor may seem at odds with his Tesla investment, but it signals a belief that the market gap for cheap EVs is real. He likely views Slate as a potential acquisition target or a catalyst for Tesla to accelerate its own low-cost vehicle program.

Broader Industry Context

The EV industry is undergoing a shakeout. Established automakers like Ford and General Motors are scaling back some EV ambitions due to slower-than-expected adoption. Meanwhile, Chinese brands are flooding global markets with cheap models, aided by government subsidies. Tesla's response has been price cuts, which boosted volumes but squeezed margins. In Q1 2025, Tesla's automotive gross margin (excluding regulatory credits) fell to around 18%, down from 25% a year earlier.

Regulatory pressures also mount. The EU has imposed tariffs on Chinese EVs but allowed Tesla to opt in under special conditions. In the U.S., the Inflation Reduction Act provides subsidies for domestic EV and battery production, which Tesla benefits from through its Texas and Nevada facilities. Still, the company faces investigations from the National Highway Traffic Safety Administration (NHTSA) over Autopilot safety.

What's Next for Tesla?

For Tesla to reverse its stock decline, analysts suggest it must deliver on the next-generation vehicle, demonstrate robotaxi progress, and maintain sales growth. Musk has promised a new product reveal later this year, possibly an affordable model built on a streamlined manufacturing process. The company also plans to expand its Supercharger network and energy storage business, with Megapack deployments rising steadily.

Ross Gerber's advice to 'sell EVs again' may sound simplistic, but it captures a sentiment that Tesla's identity as an automaker is being overshadowed by its pursuit of moonshot projects. While innovation is core to Tesla's brand, neglecting the core business risks losing market share to more focused competitors. The coming months will reveal whether Musk heeds such advice or remains steadfast in his broader vision.

Source:MSN News