Tesla must focus on Model 2, not its high-risk robotic rent-a-cars, to reverse 30% share price slide, says Wade Bush

• Tesla shares are down 30% so far this year, and the low-cost Model 2 has been the key to the turnaround, according to Wedbush.

• Analyst Dan Ives said that if Tesla abandons the Model 2, then its stock price will be under a dark cloud.

• "If robotaxis is touted as the 'magic model' to replace the Model 2, we would consider that a disastrous negative impact on Tesla's story," Ives said.

Wedbush analyst Dan Ives thinks Tesla's stock won't reverse the sell-off unless it commits to its original plan to develop low-cost Model 2 cars.

Tesla shares are down 30% so far this year, and 58% since their all-time high, as worries mount about weakening demand for electric cars. the company's first-quarter deliveries were well below expectations, with one analyst estimating the company's stockpile of unsold cars at about 150,000 units.

A recent Reuters report that Tesla is abandoning plans for a low-cost Model 2 in favor of focusing on the Robotaxi platform has stirred up concerns among Tesla's bullies, including Ives.

"If robotaxis is touted as the 'magic model' to replace the Model 2, we'd say that's negative news for Tesla. It would be a risky gamble for Tesla to abandon the Model 2 and go straight to the robotaxis," Ives said in a note on Friday.

Tesla's chief executive Elon Musk denied the Reuters report, but the company did announce an event on Aug. 8 to discuss the development of its robotic rental cars.

Ives is concerned that Tesla may abandon the Model 2 because he estimates that Tesla's future growth of about 60% will come from low-cost cars priced at about $25,000 USD. Meanwhile, Ives expects that the fully self-driving Robotaxi won't hit the road until 2030, and the Model 2 won't be ready until 2026.

"Robotaxi is not the near-term solution to fill this growth gap, the Model 2 is, and we must communicate this development to the Street on our April 23 conference call," Ives said.

Ultimately, the potential pivot away from the Model 2 (which has long been part of Tesla's "Total Artefacts Program") will be another worry for the bulls as Tesla deals with stiff competition from Chinese automakers and hybrids, as well as the carrot of Maas's resonant AI efforts going their separate ways from Tesla's growth.

"Unlike at other times," Ives said, "Tesla's criticism was justified this quarter by sluggish growth, compressed margins, a horrific Chinese market, and increasing competition from all sides of the noodle." It's a fork in the road for Mas resonance, and it's important to get Tesla through this period of turbulence, or dark days may be ahead.

Wedbush reiterated Tesla's "Outperform" rating and $300 price target, which implies a potential upside of $73% from prior levels.

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