Advertisements
In a notable shift from his previous stance, Ross Gerber, the CEO of Gerber Kawasaki Wealth and Investment Management, has voiced serious concerns about the future of TeslaOnce one of the company’s most ardent supporters and early investors, Gerber now predicts that the electric vehicle (EV) giant could see its stock price drop by as much as 50% within the next yearThis marks a dramatic change in his outlook on the company, as he had once been one of Tesla’s strongest advocates on Wall Street.
Gerber’s relationship with Tesla began long before it became a mainstream name in the world of electric vehiclesHe was one of the few investors who recognized the potential of Tesla in its early days, investing substantial capital when the company was still a relatively unknown playerBy 2021, Tesla’s stock had surged to unprecedented heights, solidifying Gerber’s early investment as a lucrative oneHowever, over the past year, Gerber’s views have shifted dramatically, and his once-optimistic outlook has transformed into skepticism and criticism, particularly regarding the company’s management, technological challenges, and competitive pressures.
In August of the previous year, Gerber took the first step toward distancing himself from Tesla when he announced that he had sold off approximately half of his Tesla holdings, amounting to a value of $60 millionThis move was prompted by his growing concerns over the declining popularity of Tesla vehiclesGerber’s growing reservations were further reflected in his statement in September, where he proclaimed that he would divest completely from the company if there was no significant improvement in Tesla’s performance within the next six monthsBy December, his tone had become even more negative, as he argued that even if Elon Musk’s connections with influential figures, including political leaders, bore fruit, the benefits would be minimal for Tesla’s future.
Looking back at Gerber’s earlier statements, one cannot help but feel a sense of prophetic accuracy
Advertisements
In early 2025, Tesla’s stock price had indeed come under pressure, dropping nearly 11% from its peakThis decline in stock value has only fueled Gerber’s pessimistic outlook, leading him to firmly believe that the downward trajectory will likely continueIn a recent interview, Gerber outlined four key reasons for his bleak prediction about Tesla’s future.
The first major concern that Gerber raised revolves around Tesla’s Full Self-Driving (FSD) initiativeTesla has long made headlines for its ambitious plans to develop an autonomous driving system, with the goal of launching an autonomous taxi service in Austin, Texas, by June 2025. Gerber, however, expressed deep skepticism about this plan, calling it “almost impossible to achieve.” He pointed to the technological limitations of Tesla’s approach to autonomous driving, which relies heavily on cameras rather than lidar sensors, a critical component in other leading autonomous driving systems like those from WaymoWhile companies like Waymo use lidar for precise 3D mapping and obstacle detection, Tesla has opted to rely on a vision-based system using camerasGerber argues that without the safety assurances provided by lidar, Tesla’s system is fundamentally flawed and that the company is “far behind” in the race to develop fully autonomous vehiclesThe growing skepticism about Tesla’s FSD capabilities has become one of the primary factors in Gerber’s pessimism about the company’s future.
Another significant issue Gerber highlighted is Elon Musk’s growing list of commitments outside of TeslaMusk is known for his work with SpaceX, Neuralink, and his more recent venture into the realm of artificial intelligence with xAIGerber expressed concern that Musk’s divided attention and focus on so many different ventures could be detrimental to Tesla’s successMusk’s personal life, including his role as the father of eleven children, also adds to the distractions that could pull him away from the day-to-day operations of Tesla
Advertisements
Gerber believes that Musk’s increasing fixation on AI, in particular, could take away from the attention needed to address the challenges facing Tesla’s core business—electric vehicles.
The third issue that Gerber pointed to was the slowdown in Tesla’s sales growthDespite the initial excitement around Tesla’s autonomous driving capabilities and its ambitious plans for the future, the company’s core business—automobile sales—has begun to show signs of stagnationWhile Tesla continues to dominate the EV market in the United States, its international growth is facing increasing challengesOne of the key threats to Tesla’s expansion is the growing competition from Chinese automaker BYD, which has gained significant traction in global marketsIn particular, BYD’s ability to offer affordable EVs with strong performance features has made it a formidable competitor to Tesla, especially in markets where Tesla has struggled to capture substantial market share.
Perhaps one of the most politically sensitive issues that Gerber raised is Musk’s relationship with U.SPresident Joe BidenGerber suggested that Musk’s outspoken comments on political issues have led to public backlash, which has, in turn, affected Tesla’s reputation and salesIn particular, Gerber pointed to the sharp declines in Tesla’s sales in European markets, including a staggering 63% drop in France, a 60% decline in Germany, and a 38% reduction in NorwayAnalysts have speculated that Musk’s controversial statements on topics ranging from politics to his relationship with world leaders could have negatively influenced consumer sentiment toward TeslaThis public backlash could be one of the key factors contributing to the company’s struggles in European markets.
Finally, Gerber addressed Tesla’s extraordinarily high valuation compared to other automakers and tech companiesWhile Tesla continues to command a premium in the stock market, Gerber warned that the company’s high valuation may be unsustainable if its sales growth continues to slow
Advertisements
Tesla’s market capitalization, which stands at a staggering $1.1 trillion, is almost five times the value of Toyota, despite Tesla’s profits being only 20% of Toyota’sThis disparity in valuation, coupled with Tesla’s price-to-earnings ratio of 118, suggests that investors may be overvaluing the company, especially when compared to other tech giants like Nvidia, which has a price-to-earnings ratio of just over 30. This overvaluation, combined with a slowdown in sales, could lead to a sharp correction in Tesla’s stock price, according to Gerber.