Written by Chris Kirkham
LOS ANGELES (Reuters) – For an entrepreneur who always struggles with broken promises, Elon Musk gave himself a to-do list Thursday night at the much-anticipated Tesla (NASDAQ:) show in Hollywood that unveils a driverless robotaxi.
Many of his announcements during a 20-minute presentation lacked practical details, sending the stock to close down nearly 9% at $217.80 on Friday.
After traversing the fake streets of a Warner Bros. film studio in a sleek silver two-door “Cybercab” prototype, he promised that the company’s iconic Model 3 and Model Y cars would be able to operate without driver supervision in California and Texas by 2018. next year.
Musk said the company would start building a fully self-driving Cybercab by 2026 for less than $30,000, and showed off a robotic car capable of transporting 20 people around town — which he said would reshape cities by “turning parking lots into parks.”
Later came the humanoid dancing robots that also mixed drinks at the bar, which Musk said Tesla would also eventually sell for $20,000 to $30,000 apiece. “I think this will be the biggest product ever, of any kind,” he announced.
Thursday night’s electronic dance music-filled event had the distinct trappings of Musk’s sales skill, but some Tesla investors and experts said they were hoping for more concrete details about how the company plans to transform from an automaker into a self-driving and artificial intelligence giant with a solid business plan.
The stock, which has been battered since its record high in late 2021 on concerns about cheaper electric vehicle competitors eroding Tesla’s market share, has risen more than 30% since April, when Musk announced the shift to taxis. However, shares are down about 16% over the past 12 months, compared to a roughly 33% increase in the broad market.
“His vision is beautiful, but someone has to make it a reality,” said Ross Gerber, a Tesla shareholder and CEO of Gerber Kawasaki Wealth and Investment Management. “Right now, for the next 24 months, Tesla has to sell electric cars. Why don’t we focus on that?”
Gerber said he’s happy to see products like the Cybercab and robovan, but he also hopes to see a more traditional, lower-priced mass-market vehicle the company can sell in the near future.
Musk has pledged for years to sell a car expected to start at around $25,000, a promise that investors viewed as crucial to winning new customers. Reuters exclusively reported on April 5 that Tesla had abandoned that project, initially sending Tesla shares lower.
Shares of ride-hailing companies Uber (NYSE:) and Lyft (NASDAQ:) shares closed higher by about 11% and 10%, respectively, as analysts said the lack of details about Tesla’s robotaxi eased competition concerns for the companies.
“backward years”
Tesla aims to leapfrog existing players in the self-driving space, including Alphabet Inc.’s (NASDAQ:) Waymo, by pursuing a lower-cost technology path that Musk believes will allow the company to scale its self-driving vehicles much faster than competitors.
Tesla’s strategy is much simpler and cheaper than that of its competitors, but it suffers from serious weaknesses. Chief among them is that the artificial intelligence technology underlying the self-driving system makes it nearly impossible to determine the cause of an accident or other failure — something that could worry regulators.
“Tesla’s software is at least years behind Waymo’s,” said Matthew Wansley, a professor at Cardozo Law School in New York. “That’s the hard part. No flashy car design is going to change that.”
Tesla’s competitors use similar AI and camera technology, but rely on so-called redundant systems and more expensive sensors as a safety precaution.
Ramesh Bhola, co-chief investment officer at Creative Planning, which owns Tesla shares, said he was impressed by the presentation but “obviously we were looking for more details about exactly what his future plans are and how he’s going to generate income.” “This is artificial intelligence and new robotics.”
In particular, Bulla said he expects regulators to pose a “major obstacle” to Musk’s plans to shift to unsupervised self-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 showed off the prototypes, and there’s definitely some excitement around it,” Bulla said. But he said widespread adoption of self-driving e-taxis, where passengers can book their rides through an Uber-style app, is still “three to four years away.”
That’s not necessarily a bad thing, Bulla said, adding that he would tell clients not to sell Tesla shares. “There are many, many ways to monetize this technology,” he said. “Cybercab may not necessarily be next year, but down the road, the feasibility is there.”
Musk has said that he plans to operate a fleet of self-driving Tesla taxis that passengers can access through the app. The app was not mentioned at Thursday’s event.
Tasha Kenny, director of investment analysis at Tesla Investors ARK Investment Management, said she was hoping to get more details about the app.
However, Kenney said she was encouraged by Musk’s timeline for introducing an unsupervised version of the full self-driving system in Texas and California next year.
“If they can do that, I see no reason not to launch a robotaxi service soon after,” she said.
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