Ross Gerber， CEO of Gerber Kawasaki Wealth Investment Management and a prominent Tesla investor， recently commented that Tesla’s second-quarter earnings were quite dismal， with no sign of hope visible.
In Gerber’s view， the electric vehicle manufacturer’s problems are not going away anytime soon. He continues to believe that the company’s biggest and most crucial issue remains CEO Elon Musk’s “public relations crisis.”
During a recent interview， he stated that unless Musk resolves his reputation issues， which have been damaged among some consumers due to his involvement in politics this year， Tesla might struggle to maintain its growth.
Gerber added that he believes Musk disappearing from the public eye for at least a year could potentially boost Tesla.
He elaborated， “Unless someone is willing to confront Musk’s political stance， not just his opinions but his actual behavior in public， it’s just extremely inappropriate， and frankly， everyone is turned off by him right now. When will someone actually address this obvious problem， which is Musk himself?”
“So， perhaps in a year， things will improve. But if he doesn’t change his behavior， I don’t see things getting better，” he added.
Tesla’s global sales have plummeted， partly attributed to Musk’s erratic behavior on social media and his deep dive into politics this year. The company’s automotive revenue for the last quarter fell to $16.6 billion， a 16% decrease year-over-year. Total revenue was $22.4 billion， down 12% year-over-year， marking the steepest quarterly decline in at least a decade.
“I mean， it’s garbage，” Gerber remarked about Tesla’s latest performance， adding that the company’s decline in a rapidly evolving industry is “sad and frustrating.”
Furthermore， Gerber believes that Tesla’s financial situation could continue to deteriorate， with capital expenditures potentially rising in the short term while revenue stalls. He posits that Tesla needs to introduce lower-cost models to remain competitive globally.
“In my opinion， there’s no question that to improve sales， they absolutely must introduce a new， lower-priced model，” he added. “And right now， Tesla seems to be in a crisis.”
On this point， Musk himself indicated during the earnings call that Tesla is poised to launch its long-awaited affordable electric vehicle， which will be a new version of the Model Y. Tesla disclosed in its earnings report that preliminary production of this model began in June and mass production is anticipated to commence in the latter half of this year.
Gerber concluded with a sigh， “Sadly， I fear it will take a terrible crisis to bring out the best in Elon， so maybe this time we can do that. You know， I don’t know how many rabbits he can pull out of a hat， but I wouldn’t bet against Elon.”
This is not the first time Gerber has issued warnings about Tesla’s outlook. Earlier this month， he cautioned that Tesla’s stock price could drop by 50% if the market re-evaluates its valuation.
