Tesla’s highly anticipated Robotaxi Day arrives Thursday in California, where CEO Elon Musk promises to unveil the final design and detailed plans for Tesla’s autonomous ride-hailing service. The event, originally scheduled for August, comes at a critical time as Tesla struggles in an increasingly competitive electric-vehicle market and investors seek clarity on the company’s AI-driven future.
Musk has long positioned autonomous driving technology as Tesla’s primary value generator, describing it as transformative as the shift from horses to automobiles. “In the future, gasoline cars that are not autonomous will be like riding a horse and using a flip phone,” Musk told analysts in April after disappointing first-quarter earnings. The robotaxi announcement helped boost Tesla’s stock price, which has remained muted amid broader market gains.
However, three critical questions loom over the event. First, fleet management remains uncertain. UBS analyst Joseph Spak questions whether Tesla owners will actually rent out their $45,000 vehicles to strangers, raising concerns about maintenance, cleaning, recharging, and insurance liability. If owner rentals fail, Tesla would need to operate its own fleet—a capital-intensive proposition that didn’t work well for Hertz, which sold off its Tesla fleet this year citing high repair costs.
Second, safety concerns persist. UBS estimates Tesla’s Full Self-Driving (FSD) v12.5 disengages every 180-200 miles, or every 100-120 miles on city roads. To match Waymo’s California DMV standard of one disengagement every 84,923 miles, Tesla would need a 770-times improvement rate. Tesla doesn’t publicly release disengagement data, making it difficult to assess robotaxi readiness. Trust has been further eroded by massive recalls and Autopilot-linked accidents.
Third, AI development costs are astronomical. Morgan Stanley analyst Adam Jonas warns of a capital “arms race” in autonomous vehicles requiring “tens (possibly hundreds) of billions of dollars of investment over time.” Jonas questions whether Musk can meet investors’ high expectations, noting that “Tesla’s future valuation is highly dependent on its ability to develop, manufacture, and commercialize autonomous technologies.” While demonstrations of the “Cybercab” prototype spotted in Los Angeles may generate excitement, investors need concrete details about AI improvements, execution timelines, and the total addressable market to justify the massive investment required.
Key Quotes
In the future, gasoline cars that are not autonomous will be like riding a horse and using a flip phone.
Elon Musk made this statement to analysts in April 2024, positioning autonomous driving as an inevitable technological shift comparable to major historical transitions. This reflects his long-standing belief that self-driving capability represents Tesla’s true value proposition beyond electric vehicles.
Is an individual really ready to let the Model Y they spent ~$45k on be used by strangers? We believe human behavior may be difficult to overcome.
UBS analyst Joseph Spak raised this concern about Tesla’s owner-rental model for robotaxis, highlighting practical challenges around maintenance, cleaning, recharging, and insurance that could undermine Musk’s business plan and force Tesla into more capital-intensive fleet ownership.
Tesla’s future valuation is highly dependent on its ability to develop, manufacture, and commercialize autonomous technologies.
Morgan Stanley analyst Adam Jonas emphasized the existential importance of AI development to Tesla’s business case, underscoring that the company’s stock price hinges not just on electric vehicle sales but on successfully delivering autonomous driving capabilities that justify massive ongoing investments.
Our Take
Tesla’s Robotaxi Day exemplifies the gap between AI promises and practical deployment. While Musk has consistently used autonomous driving announcements to boost stock prices, the technical reality reveals significant challenges. The 770-times improvement needed to match Waymo’s safety standards isn’t just incremental progress—it represents a fundamental question about whether Tesla’s camera-only approach can achieve true autonomy. The reluctance to release disengagement data is particularly concerning, suggesting performance may not support the ambitious timeline. More broadly, this event will test whether investors remain willing to fund expensive AI moonshots based on vision alone, or demand concrete evidence of progress. The outcome could influence capital allocation across the entire AI industry, determining whether bold promises or proven results drive future investment decisions.
Why This Matters
This event represents a pivotal moment for AI in transportation and Tesla’s strategic direction. As one of the most visible AI applications, autonomous vehicles serve as a bellwether for artificial intelligence’s real-world capabilities and commercial viability. Tesla’s approach—using camera-based vision systems and neural networks rather than expensive lidar—could democratize self-driving technology if successful, but faces significant technical and regulatory hurdles.
The broader implications extend beyond Tesla. The autonomous vehicle industry is experiencing a capital arms race, with companies like Waymo, Cruise, and traditional automakers investing billions in AI development. Success or failure will influence investor confidence across the entire AI sector and shape regulatory frameworks for autonomous systems. For businesses, the robotaxi model could disrupt transportation, logistics, and urban planning. For workers, it threatens millions of driving jobs while creating new opportunities in AI development and fleet management. The safety questions raised by analysts highlight the critical importance of transparency and rigorous testing standards as AI systems take on life-or-death responsibilities in public spaces.
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Source: https://www.businessinsider.com/tesla-robotaxi-release-date-elon-musk-stock-price-2024-9