Tesla's robotaxi event was long on Musk promises. Investors wanted more details.
Updates shares in paragraphs 2, 7 and 11
By Chris Kirkham
LOS ANGELES, Oct 11 (Reuters) -For a businessman who perpetually struggles with broken promises, Elon Musk gave himself quite a to-do list Thursday night at Tesla's TSLA.O long-awaited Hollywood unveiling of its driverless robotaxis.
His slew of announcements during a 20-minute presentation were short on practical details, which pushed the stock to close nearly 9% lower at $217.80 on Friday.
After traversing the fake streets of the Warner Bros movie studio set in a sleek, silver two-door "Cybercab" prototype, hepromised 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 would start building the fully autonomous Cybercab by 2026 at a price of less than $30,000, and showed off a robovan capable of transporting 20 people around town - which he said would reshape 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 a piece. "I think this will be the biggest product ever, of any kind," he declared.
Thursday night's electronic dance music-infused event had the signature trappings of Musk's salesmanship, but some Tesla investors and experts said they were hoping for more concrete details on how the company plans to transform from an automaker into an autonomous driving and artificial intelligence titan with a solid business plan.
The stock, which has been pummeled since its record high in late 2021by fears of cheaper EV rivals eating into Tesla's market share, is up over 30%since April, when Musk announced the shift to robotaxis. Still, shares are down nearly 16%over the past 12 months, compared with a nearly 33% increase in the broad-market S&P 500 index .SPX.
"His vision is lovely, but somebody has to actualize it," said Ross Gerber, a Tesla shareholder and CEO of Gerber Kawasaki Wealth and Investment Management. "For now, for the next 24 months, Tesla has to sell EVs. Why aren't we focused on that?"
Gerber said he was happy to see products like the Cybercab and the robovan, but hoped to also see a more traditional, lower-priced mass-market vehicle that the company could sell in the near future.
Musk had for years pledged to sell a car expected to start at about $25,000, a promise that investors saw as critical to winning new customers. Reuters reported exclusively on April 5 that Tesla had abandoned this project, initially sending Tesla shares down.
Shares of ride-hailing firms Uber UBER.N and Lyft LYFT.O closedabout 11% and 10% higher, respectively, as analysts said the lack of details on Tesla's robotaxis eased competition worries for the companies.
'YEARS BEHIND'
Tesla is aiming to leapfrog incumbent self-driving players, including Alphabet's GOOGL.O Waymo, by pursuing a lower-cost technological path that Musk believes will allow the company to scale up its autonomous vehicles far quicker than rivals.
Tesla's strategy is simpler and much cheaper than that of its rivals, but has critical weaknesses. Chief among those is that the AI technology underpinning its self-driving system makes it nearly impossible to pinpoint why a crash or other failure occurred - something that could concern regulators.
"Tesla software is at least years behind where Waymo is. That's the hard part. No flashy vehicle design is going to change that," said Matthew Wansley, professor at New York's Cardozo School of Law.
Tesla's rivals use similar AI and camera technology, but layer on so-called redundant systems and more-expensive sensors as a safety precaution.
Ramesh Poola, co-chief investment officer at Creative Planning, which holds Tesla shares, said he was impressed by the presentation but "obviously, we were looking for more details on what exactly his future plans are going to be and how he's going to monetize this new AI and robotics."
In particular, Poola said he anticipates regulators will pose a "major hurdle" to Musk's plans to shift to unsupervised autonomous driving by next year. Tesla's current "Full Self-Driving" driver-assistance feature cannot be operated safely without a human driver paying constant attention.
"He's shown the prototypes and definitely there's some excitement around it," Poola said. But widespread adoption of autonomous Cybercabs, where riders can hail rides through an Uber-style app, are still "maybe three to four years away," he said.
That is not necessarily a bad thing, Poola said, adding that he will be telling clients not to sell Tesla stock. "There are lots and lots of avenues to monetize this technology," he said. "Cybercab may not necessarily be next year, but down the road, the viability is there."
Musk had said he planned to operate a fleet of self-driving Tesla taxis that passengers can hail through an app. He made no mention of the app at Thursday's event.
Tasha Keeney, director of investment analysis at Tesla investor ARK Investment Management, said she had been hoping for more specifics on the app.
However, Keeney said she was encouraged by Musk's timeline of offering an unsupervised version of its full self-driving system in Texas and California next year.
"If they can do that, I don't see why they wouldn't launch a robotaxi service soon after," she said.
INSIGHT-Tesla's robotaxi push hinges on 'black box' AI gamble https://www.reuters.com/technology/tesla-gambles-black-box-ai-tech-robotaxis-2024-10-10/
EXCLUSIVE-Tesla scraps low-cost car plans amid fierce Chinese EV competition https://www.reuters.com/business/autos-transportation/tesla-scraps-low-cost-car-plans-amid-fierce-chinese-ev-competition-2024-04-05/
Reporting by Chris Kirkham in Los Angeles; Additional reporting by Akash Sriram, Abhirup Roy and Deborah Sophia; Editing by Brian Thevenot, Sayantani Ghosh, Christopher Cushing, Rod Nickel and Alan Barona
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
