Ross Gerber: The Tesla Investor Who’s Now Betting Against Elon Musk
Ross Gerber, an early investor in Tesla and once a strong believer in Elon Musk’s vision, has become increasingly vocal about his concerns regarding the company. Gerber, who is the president and CEO of Gerber Kawasaki Wealth & Investment Management, has sold a significant portion of his Tesla shares in recent months. He believes Tesla’s stock could plummet by as much as 50% in 2025, driven by a combination of factors that he outlines in a recent interview with Business Insider. Gerber’s warnings about Tesla’s vulnerabilities come after he reduced his firm’s Tesla stake by 31% in 2024, leaving him with 262,000 shares worth $106 million at the end of last year. His bearish outlook on Tesla has been gaining attention, and his predictions seem to be aligning with the stock’s recent performance, which has dropped 16% so far in 2025.
Full Self-Driving: A TECHNOLOGY THAT “JUST DOESN’T WORK”
One of Gerber’s primary concerns is Tesla’s Full Self-Driving (FSD) technology. He argues that Musk’s June 2025 deadline for launching an autonomous taxi network in Austin, Texas, is overly ambitious and unrealistic. Gerber believes that Tesla’s autonomous driving platform, which relies on cameras rather than LIDAR sensors used by competitors like Alphabet’s Waymo, is fundamentally flawed. “All of this stuff is going to come to roost this year because he put this deadline on full self-driving working in a couple of months. It almost seems impossible for that to happen,” Gerber told Business Insider. He emphasized that without LIDAR, Tesla’s system lacks the safety and reliability needed for true autonomy, and the company is falling behind in the race to develop robust autonomous driving technology.
Elon Musk: Distracted and Divided
Gerber also points to Elon Musk’s increasingly divided attention as a major problem for Tesla. Musk is juggling multiple ventures, including SpaceX, xAI, and even government efficiency efforts, all while being an active user on X (formerly Twitter) and managing his personal life as a father of 11 children. Gerber believes that Musk’s focus has shifted away from Tesla, particularly toward AI, which he sees as a detriment to the company. “His 100% focus is on AI, and that’s really a detriment to Tesla more than it’s a plus for xAI and all the other businesses because he doesn’t work at Tesla anymore,” Gerber said. He worries that Musk’s absence is hindering Tesla’s ability to address critical challenges, particularly with FSD.
Slowing Vehicle Sales: A Core Business in Trouble
Despite the hype surrounding Tesla’s autonomous and robotic ambitions, the company’s core business remains selling cars. However, Tesla’s vehicle sales are starting to slow, with 2024 marking the company’s first annual decline in electric vehicle (EV) sales. While Tesla management has forecasted a return to growth in 2025, Gerber is skeptical. He points to increasing competition from BYD, a Chinese EV manufacturer that has become the largest in the world. Gerber notes that BYD is particularly strong in emerging markets, where Tesla has struggled to maintain its dominance. Additionally, Musk’s close association with former President Donald Trump has sparked backlash, with some consumers boycotting Tesla in protest. For example, singer Sheryl Crow recently sold her Tesla, citing her inability to align with Musk’s values. This trend appears to be gaining momentum, with Tesla’s January sales plunging in key markets like France, Germany, and Norway.
Tesla’s Premium Valuation: A Vulnerability Waiting to Be Exposed
Another factor contributing to Gerber’s bearish outlook is Tesla’s lofty valuation. At a market capitalization of $1.1 trillion, Tesla is nearly five times larger than Toyota despite delivering just 20% of Toyota’s profits last year. The company’s forward price-to-earnings ratio of 118x is more than triple that of the next most expensive “Magnificent 7” stock, Nvidia. Gerber argues that this premium valuation is unsustainable, especially if Tesla’s vehicle sales continue to slow. “The issue to me is, I’ve got $100 million in Tesla stock at 125x earnings, and it’s not even close to any PE, to any normal Mag 7 stock,” Gerber said. He believes that Tesla’s stock could drop by as much as 50% if things don’t improve in 2025. Some Wall Street firms, such as JPMorgan, appear to agree with Gerber, sticking to a $135 price target for Tesla stock, which represents potential downside of 60% from current levels.
The Perfect Storm: Why Tesla Could Struggle in 2025
Gerber’s analysis paints a picture of a company facing a perfect storm of challenges. From the limitations of its FSD technology to Musk’s distractions, slowing vehicle sales, and a vulnerable valuation, Tesla appears to be at a crossroads. While Gerber acknowledges the company’s historical success and the brilliance of Musk’s vision, he believes that Tesla’s current trajectory is unsustainable. His decision to sell a significant portion of his Tesla shares reflects his belief that the risks outweigh the potential rewards. As Gerber puts it, “We’ve got to sell cars, and people just don’t want them anymore.” If his predictions come to fruition, 2025 could be a very rough year for Tesla and its shareholders.
