For a businessman who constantly struggles with broken promises, Elon Musk gave himself quite a to-do list Thursday night at the long-awaited Hollywood unveiling of Tesla’s (NASDAQ:TSLA) driverless robot taxis.
After driving around the artificial streets of the Warner Bros movie studio in a sleek, silver two-door “Cybercab” prototype, Musk promised that the company’s popular Model 3 and Model Y vehicles would be able to operate without driver supervision in California and Texas by next year.
Musk said the company will begin building the fully autonomous Cybercab by 2026 at a cost of less than $30,000, and showed off a Robovan capable of transporting 20 people around the city — which he said will transform cities by “turning parking lots into parks.”
Later came the dancing humanoid robots that also mixed drinks at the bar, which Musk said Tesla will also eventually sell for $20,000 to $30,000 apiece. “I think this is going to be the biggest product ever,” he declared.
Thursday night’s event, which featured electronic dance music, featured Musk’s salesmanship, but some Tesla investors and experts said they had hoped for more concrete details on how the company plans to transform itself from an automaker into an autonomous driving and artificial intelligence titan with a solid business plan.
Tesla shares fell 6% in premarket trading Friday. The stock, which has been dogged in recent years by fears that cheaper electric vehicle rivals could eat into Tesla’s market share, has risen nearly 50% since April, when Musk announced the shift to robotaxis. Still, shares have fallen 8% over the past year, compared with a 33% rise in the broad S&P 500 index.
“His vision is beautiful, but someone has to make it happen,” said Ross Gerber, a Tesla shareholder and CEO of Gerber Kawasaki Wealth and Investment Management. “Right now, in the next 24 months, Tesla needs to sell electric vehicles. Why aren’t we focusing on that?”
Gerber said he was excited about products like the Cybercab and Robovan, but hoped the company could also offer a more traditional, cheaper mass-market vehicle in the near future.
Musk had promised for years to sell a car expected to start at around $25,000, a promise that investors saw as crucial to attracting new customers. Reuters exclusively reported on April 5 that Tesla had abandoned that project, which initially sent Tesla shares lower.
Shares of ride-hailing companies Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) rose about 4% in premarket trading, a sign that Musk’s announcements were not seen as a threat to the companies.
“YEARS BEHIND”
Tesla is looking to overtake established autonomous vehicle players, including Alphabet’s (NASDAQ:GOOGL) Waymo, by pursuing a lower-cost technological path that Musk believes will allow the company to develop its autonomous vehicles much faster than rivals.
Tesla’s strategy is simpler and much cheaper than its rivals’, but it has key weaknesses. Chief among them is that the AI technology underlying its autonomous driving system makes it nearly impossible to determine exactly why an accident or other failure occurred — something that could worry regulators.
“Tesla’s software is at least years behind Waymo. That’s the hard part. No flashy vehicle design will change that,” said Matthew Wansley, a professor at the Cardozo School of Law in New York.
Tesla’s competitors use similar AI and camera technology but use what are known as redundant systems and more expensive sensors as a safety precaution.
Ramesh Poola, co-chief investment officer at Creative Planning, which holds Tesla stock, said he was impressed with the presentation, but “of course we wanted more details on what exactly his future plans will look like and how he will monetize this new AI and robotics.”
In particular, Poola expects regulators to put a “big hurdle” in the way of Musk’s plans to move to unsupervised autonomous driving by next year. Tesla’s current “Full Self-Driving” driver-assist feature cannot operate safely without the constant attention of a human driver.
“He’s shown the prototypes and there’s definitely some excitement around that,” Poola said. But widespread adoption of autonomous cybercabs, where passengers can order rides through an Uber-like app, is still “maybe three to four years away,” he said.
That’s not necessarily a bad thing, Poola said, adding that he will advise his clients not to sell Tesla stock. “There are tons of ways to monetize this technology,” he said. “Cybercab may not necessarily be around next year, but the viability is there in the long run.”
Musk had said he plans to operate a fleet of self-driving Tesla taxis that passengers can hail via an app. He did not mention the app at Thursday’s event.
Tasha Keeney, head of investment analysis at Tesla investor ARK Investment Management, said she had hoped for more details on the app.
Keeney, however, said she was encouraged by Musk’s timeline to offer an unattended version of his fully autonomous system in Texas and California next year.
“If they can do that, I see no reason why they wouldn’t launch a robotaxi service soon after,” she said.
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Reference;
Reuters (2024) Tesla’s robotaxi event was long on Musk promises. Investors wanted more details. By Reuters, Investing.com. Investing.com. Available at: https://www.investing.com/news/stock-market-news/tesla-robotaxi-event-was-long-on-promises-but-investors-wanted-more-details-3659177 (Accessed: 11 October 2024).
