Tesla's self-driving tech is probably worthless in the resale market, short-seller Jim Chanos says
Courtesy of Tesla, Inc.
- Elon Musk has promised self-driving Teslas by year-end.
- But Jim Chanos isn't sold on the idea, and says the tech probably has near-zero value in the resale market.
- The veteran short-seller has been a prominent critic of Tesla.
Veteran short-seller Jim Chanos has taken aim at Tesla's self-driving technology, saying the add-on offering probably has near-zero value in the resale market for cars.
"The current value of the $TSLA "Full Self Driving" package is probably close to zero in the retail market. #RealityCheck," Chanos tweeted, responding to a tech reviewer.
"Remember that Musk has said that owning an FSD package will increase the value of your $TSLA vehicle by multiples of the FSD package cost itself. Yet ascribes almost no value to it upon repurchase. In fact, over time it depreciates faster than the vehicle itself," he added.
Tesla's Full Self-Driving (FSD) kit costs $15,000 to install in the company's electric vehicles, and buyers are treated as beta testers whose feedback improves the technology. So far, around 100,000 people have chosen to add the feature.
As the software is constantly being updated, there runs the risk that buyers may find themselves saddled with obsolete technology that has little or no resale value on the used car market.
Elon Musk has for years promised fully-autonomous, self-driving Teslas, although this bold claim has not yet materialized. He claims that "level 5" capability – that is, total autonomy – will arrive "later this year", but he hasn't given further details.
Tesla's goal to achieve level 5 is one of the factors behind its $869 billion market cap and has been swept up in the stock market's excitement surrounding the AI boom.
But Chanos, whose reputation as an investment manager was built upon sniffing out fraud on Wall Street and launching successful bets against offending companies, hasn't minced words about Tesla's FSD tech.
The veteran Wall Street voice is known for his successful short bets on Enron, Wirecard, and Hertz Corporation, and he has repeatedly outed Musk and Tesla for various shortcomings over the past year.
But so far in 2023, Tesla continues to defy Chanos's bearish approach. The stock has more than doubled this year as it rides the wave of enthusiasm over the rise of generative AI. Still, the carmaker is currently trading at around $270 – well below its 2021 peak of over $400.