Tesla – Never a dull moment
- Mr Musk has been living up to his mercurial reputation by ending work from home, announcing job cuts and then backtracking on them two days later leaving everyone as confused as ever.
- Tesla also postponed its AI Day by 6 weeks in the hope that its humanoid robot would be working by then something that I suspect is very unlikely to happen.
- Currently, Tesla is proving to be almost completely decoupled from the economy with demand for its cars continuing to grow despite high inflation and unravelling fundamentals.
- Hence, cutting the workforce does not make intuitive sense which is why I suspect he was convinced to backtrack on this until the outlook is clearer.
- It is clear that he is concerned that inflation will eat into the money available for discretionary spending which combined with the increasing cost of credit, could easily hurt vehicle demand and especially in the mid to high tiers.
- Tesla’s products have high prices relative to their petrol equivalents and at the lower end of the EV market, there are plenty of cheaper competitors.
- Hence, buyers may choose to trade down on their new vehicles to save money, meaning a softening of demand for Tesla’s products.
- There is no sign of this yet, so I suspect that Mr Musk was convinced to do a U-turn on the sudden 10% headcount reduction.
- I think Mr Musk is right to be concerned with regard to the outlook for demand and the right response is probably to at least freeze hiring until the visibility is a bit better.
- Much as I like the EV trend, Tesla and much of the EV crowd are still very expensive for what they offer, leaving nuclear power as the best way to invest in the trend in my opinion.
Apple WWDC – The groundwork
- Apple’s developer conference (WWDC) kicks off today and expectations are running high that the Metaverse will be a big factor this year.
- This makes a lot of sense because love it or hate it, Apple has no choice but to go all-in on the Metaverse just in case it ends up triggering the end of the smartphone era.
- I do not expect Apple to launch a device because even with the best technology that is available today, the user experience is horrible.
- Apple cannot risk launching a device with a poor user experience because this will undermine the key differentiator of iOS which is its first-rate user experience.
- RFM research expects that it will be 2025 or 2026 before the technology is good enough to even contemplate using AR, VR or other Metaverse devices for extended periods of time.
- Instead, I suspect Apple will begin laying the groundwork for how it intends to smoothly migrate the iOS ecosystem to the Metaverse so that users stay with Apple and don’t go elsewhere if it happens.
- I have long argued that this is the biggest risk that Apple has faced for over 15 years because it was precisely a transition of this nature that sank Nokia in 2007 and Motorola before that.
- Consequently, while Apple is unlikely to launch a device, I think it will begin laying the foundations in the next versions of its operating systems and its services to be Metaverse-ready when it is in a position to go to market.
- New AR apps and services may be showcased as well as improved tools for developers to begin developing AR experiences that can also work on iPhone and iPad using the camera and the screen.
- We have seen sporadic moves in this direction over the last few years, but this year may be the year when Apple begins to bring it all together.
