Elon Musk says Tesla will unveil its robotaxi on Aug. 8; shares pop
0
Tesla will reveal its robotaxi product on Aug. 8, CEO Elon Musk said in a social media post on X.
Musk has spoken about the robotaxi project for years, and it could represent a major new business for the carmaker as investors grow wary of the company during a period of slowing growth.
Tesla shares rose over 3% in extended trading after Musk’s tweet.
Musk shared the reveal date on Friday after Reuters reported that plans for Tesla’s highly anticipated low-cost car model had been scrapped. Musk accused Reuters of “lying.”
In 2015, Elon Musk told shareholders that Tesla’s cars would achieve “full autonomy” within three years. In 2016, he said Tesla would be able to send one of its cars on a cross-country drive without requiring any human intervention by the end of the following year.
Tesla still has yet to deliver a robotaxi, autonomous vehicle or technology that can turn its cars into “level 3” automated vehicles. However, Tesla offers advanced driver assistance systems (ADAS), including a standard Autopilot option or premium Full Self-Driving “FSD” option, the latter of which costs $199 per month for U.S. subscribers or $12,000 upfront.
In a push for end-of-quarter sales, Musk recently mandated that all sales and service staff install and demo FSD for customers before handing over the keys. He wrote in an email to employees, “Almost no one actually realizes how well (supervised) FSD actually works. I know this will slow down the delivery process, but it is nonetheless a hard requirement.”
Despite its name, Tesla’s premium option requires a human driver at the wheel, ready to steer or brake at any moment.
Alphabet’s autonomous vehicle unit Waymo operates commercial, driverless ride-hailing services in Phoenix, San Francisco, and Los Angeles, and is ramping up in Tesla’s home base of Austin, Texas. Waymo also recently struck a multi-year partnership with Uber and will put its robotaxis to use delivering food for Uber Eats in Arizona. In China, Didi’s autonomous unit operates commercially in markets including Guangzhou. Companies including Wayve in the U.K. and Zoox in the U.S. continue testing their robotaxis.
Some companies have had a tough time in the crowded market.
On Friday, Apple shuttered its self-driving unit and laid off about 600 people on Friday who had been associated with the project. GM’s Cruise service previously offered self-driving car services in San Francisco before being wound down under regulatory scrutiny after an accident. Since the incident, Cruise’s robotaxi fleet has been grounded, local and federal governments have launched their own investigations and Cruise leadership has been gutted.
At Tesla, “unveil” dates do not predict a near-future date for a commercial release of a new product. For example, Tesla unveiled its fully electric heavy-duty truck, the Semi, in 2017 and did not begin deliveries until December 2022. It still produces and sells very few Semis to this day.
What is Tesla? (TSLA.O), opens new tab For now, it’s the world’s largest electric-car maker, though maybe not for long. Hopes of keeping the crown have rested on a long-promised $25,000 model. If the project gets scrapped, as Reuters reported on Friday, boss Elon Musk has one remaining advantage: using Tesla’s data trove to develop self-driving technology. It would be very risky and also very Musk.
The knock against efforts to get drivers into battery-powered rides has long been that affordable options for the masses don’t exist. Tesla’s “Model 2,” as some dub its cheap-car project, is supposed to solve that, expanding the market and reigniting growth. But it has always been a tenuous proposition. Even if cost-reduction plans went perfectly, gross profit would have barely covered the company’s operating expenses.
Chinese rivals are already ahead. Newcomer Xiaomi unveiled a sub-$30,000 car, and BYD’s models go as cheap as $10,000. In the United States, cars costing between $30,000 and $35,000 are by far the most popular, according to Wells Fargo analysts. After recent discounts, Tesla is already in that zone, and Musk has taken the pain to get here.
Musk said Reuters “is lying” in a post on X, without further explanation, after the company’s shares fell more than 5%. It is easy to see why investors would be nervous. Tesla’s valuation is flattered by anticipated auto sales growth, even after recent declines. Without that engine, Musk would have only one other advantage to exploit.
The company’s vehicles are stuffed with complicated sensors; Tesla has plowed its billions of cash flow into crunching the reams of data they produce. This investment provides a boost in the race to develop self-driving. Artificial intelligence powering that effort depends on data; Musk has plenty.
Sure, the Model 2 would make Tesla a better carmaker. But that’s not what Musk, Tesla or its premium valuation have ever really been about. The company beat doubters to make electric vehicles a reality. It is only fitting that it concentrates on using its remaining advantage, however long it lasts, on reinventing transportation again. Musk has repeatedly failed to deliver the self-driving goods for years, making the proposition a longshot. Even so, it would be a justifiable one for Tesla.
(The author is a Reuters Breakingviews columnist. All views expressed are their own.)
CONTEXT NEWS
Tesla is ending efforts to produce a significantly cheaper next-generation car, often dubbed the “Model 2” by industry analysts, Reuters reported on April 5. It is instead pivoting to focus on building self-driving taxis. In a post on social media platform X, Tesla boss Elon Musk said that Reuters is "lying."
Separately, Tesla has reduced the price of its best-selling Model Y vehicle in the United States. After federal tax credits, the base model now costs as little as under $34,000.
