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Longtime Tesla investor Ross Gerber on why Musk's ties to Trump might not boost the EV maker
- Ross Gerber, a Tesla investor, believes that Elon Musk's association with Donald Trump won't be enough to turn around the fortunes of the carmaker.
- Gerber thinks the company is facing serious challenges in the electric car business and also with its ride-hailing platform and artificial intelligence projects.
- Gerber said his fund, which started cutting its stake in Tesla in 2023, continues to sell the stock in small amounts, keeping Tesla's concentration in its portfolio to just 2%. The fund sold nearly 16,000 shares in the third quarter.
- In Gerber's view, Tesla shares should be trading around $200, implying 40% downside from the stock's closing price of $338.23 on Tuesday.
- Gerber believes Tesla's technology has plateaued in recent years, and Musk's ties to Washington won't help that. He pointed to challenges with Tesla's full self-driving technology.
- Trump's transition team has signaled that it would end the $7,500 tax credit for EVs, that Musk supports, but even that's unlikely to be a bullish catalyst for the company.
- Musk has said that repealing the tax credit would be more harmful to Tesla's rivals, but Gerber's firm has estimated that Tesla sales could drop around 25% if the tax credit was no longer available. That would be "devastating" to Tesla's business.
- Gerber thinks that Tesla shares are trading at a premium and that Elon's role in the Department of Government Efficiency will likely take his focus away from Tesla even more.
- Previously Gerber stated that he would consider completely closing his position in Tesla by the end of the year if its business did not improve or if Musk didn't refocus his attention on his companies.
- Gerber has since adjusted his view and continues to hold Tesla as a small investment in his portfolio, mostly out of bullishness on EVs in general.
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