A significant chapter in Tesla’s history closed recently. The company has advanced its technology to a high level, but fully autonomous driving software will be phased out. Investors reacted negatively, with shares sliding from two hundred sixteen dollars to about one hundred nineteen dollars and change in a span of five days. In market discussions, Elon Musk’s long running push for autonomous driving remains influential, as he has championed this capability for roughly a decade.
Tesla was the pioneer in producing vehicles designed with autonomous features, beginning in October 2016. Over the years the company released multiple software versions, and there is speculation that investor commemoration day will fall on March one, when Musk is expected to unveil the next iteration. XTB analyst Darío García commented that at first glance self driving appears distant, yet closer inspection suggests this capability could soon be part of daily life.
Investors are starting to see the potential for Tesla’s growth over the past decade. The company has demonstrated a strong compound annual growth rate and solid gross profit margins. Looking back to 2013 and moving through 2022, earnings before interest, taxes, depreciation, and amortization rose at a notable pace. The company posted its first full year of profit in the year of 2018, and from 2020 onward its net income climbed from several hundred million to over twelve billion dollars, reflecting a multi hundred percent compound annual growth rate. Free cash flow also improved significantly, turning positive by the end of 2022 after a longer period of more modest performance in 2013, leaving a healthy amount available for shareholders.
García observed that profitability has been robust. The average selling price has shown a downward trend before stabilizing around fifty five thousand dollars, and operating margins have climbed toward the high teens. He noted that any extra revenue from greater operational efficiency becomes increasingly valuable at this stage.
Economy or premium cars?
Despite skepticism about the electric vehicle market, Tesla continues to post strong sales. The company delivered about 1.31 million vehicles in a recent year and has plans to increase output to roughly 1.8 million for the upcoming year. This ambitious goal points to a continued focus on scalable growth. Tesla currently produces four models: the Model 3, Model Y, Model S, and Model X. While mass market models aim to reach a broad audience, the higher end variants target a more premium segment. Price ranges remain a barrier for some buyers, with early models priced in the forty to sixty thousand dollar region and premium configurations starting at around a hundred thousand dollars.
Tesla has repeatedly stated its aim to lower the average selling price by making the production process more efficient. Yet competitors are also moving quickly, offering electric vehicles at lower prices and with a wider variety of models. As García points out, other automakers such as Nio, Byton, and BYD have established a presence in the region. Tesla appears to be directing production toward more economical variants with lower margins and higher volumes, while another possibility is a shift toward becoming a true premium automaker. In that scenario, the company led by Elon Musk could align with brands like Mercedes, BMW, Audi, or Lexus, capturing a different segment of the market while maintaining its technology leadership.