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Countdown to Tesla's Robotaxi Launch: What to Expect from Musk's Latest Venture

AInvestWednesday, Oct 9, 2024 3:19 am ET
5min read

Tesla is gearing up to unveil its Robotaxi this Thursday, and everyone is curious about what it will look like, whether Tesla will announce a commercialization strategy, and what astonishing timetable Elon Musk might announce to boost Tesla's stock price.

The long-awaited event, originally scheduled for August, aims to further reinforce the concept that Tesla has been promoting: it is first and foremost a technology company, and only then an automobile company. At the end of September, Musk posted a message on social platform X titled We, Robot, calling it one for the history books. Due to the high expectations for the event, Tesla's stock took a significant hit when it was postponed.

What will Tesla showcase? A significant question for Tesla is that it does not have an autonomous taxi system. In the absence of such a system, what will Tesla showcase? If it's merely a new model using Tesla's FSD, industry media and savvy investors will clearly not consider this a history-making event.

Cybercab Prototype

What people most hope to see is a prototype of a new vehicle concept, which would be Tesla's first new model since the announcement of the Cybertruck in November 2019.

Musk refers to the robot taxi as the Cybercab, which seems to confirm the design concept revealed last year in Walter Isaacson's biography—a compact vehicle similar to the Cybertruck with angular edges and stainless steel trim, featuring two doors and two seats.

This vehicle will likely also not have a steering wheel or pedals. Although Tesla's engineers opposed this design at the time of the release, Musk has been steadfast in his desire to bring a vehicle designed specifically for the market, as described in Isaacson's book.

Tesla may face regulatory issues with this design choice, which does not comply with federal motor vehicle safety standards, and Musk is expected to use this as a reason to explain why bringing the Cybercab to market will be difficult.

A Vehicle Without a Steering Wheel

There will definitely be some kind of vehicle without a steering wheel or pedals, with a luxurious interior suitable for use as a taxi. It might be like an existing Tesla car without the control devices, possibly a smaller two-seater, or a luxury workspace the size of a Cybertruck pickup.

But the question is, it's hard to surprise people with this, as there have already been many concept cars and actual cars for this purpose. Some leaked models look very similar to the recently released Rimac Verne robotaxi. Nonetheless, people still hope Tesla can bring a surprise.

The car may be able to drive around the enclosed movie studio without supervision, giving people a taste of the future. For more than eight years, Musk has been predicting that this future is only about a year away. But as a result, his predictions have lost most of their credibility. Many companies have already conducted similar demonstrations (although usually including lidar). In 2009, Waymo/Google launched a robotaxi service based on golf carts on the Google campus as their first project, although it was not shown to the public. At that time, Google was still 15 years away from expanding the project.

In addition to a vehicle without a steering wheel or pedals, there should also be a ride-hailing app that may offer some nice new user experiences. Perhaps there will also be some interesting new in-car experience demonstrations, many companies are trying to create concepts for what people might do when riding in an autonomous taxi, but the reality is likely to be staring at the phone, just like people do on Uber and other modes of transportation.

"The Show Goes On"

Tesla usually hosts large reveal events at one of its facilities, so choosing a Hollywood studio is a change that suggests Musk's showmanship will be on display.

The discussed studio is open to the public for tours, so visitors (mainly Tesla shareholders and super fans) will have the opportunity to be captivated by scenes from titles such as Batman, Friends, Gilmore Girls, The Big Bang Theory, Harry Potter, and more.

This also allows Tesla to utilize large stages and sets, some of which resemble a small part of a suburb or even a small urban area. This could be the perfect venue for Tesla to showcase its Cybercab in an autonomous driving action—a controlled, closed environment with no other traffic, where the car will be able to drive itself at low speeds.

The demonstration may showcase the ride-sharing app that Tesla mentioned during its first-quarter earnings call in April.

Another One-Year Prediction

Musk predicts that Tesla cars will achieve full autonomy within a year, which has caused ridicule in the industry.

An autonomous car is a car in which you can sleep inside and bet your life, which is a very daunting task. Therefore, although Tesla is not close to achieving this goal, it does not stop them from saying so.

Therefore, Tesla may only conduct a scheduled course demonstration at this event, possibly even in a Model 2 or concept car, and announce its goals again.

Other Product Announcements

Deepwater Asset Management predicts that in addition to the Cybercab prototype, Tesla will provide a preview (but the key is without a prototype) of a $25,000 electric vehicle, which fans call Model 2. Analysts Gene Munster and Brian Baker said they expect the appearance and feel of Model 2 to be similar to the Cybercab, likely based on Tesla's past comments that the two will share a vehicle platform.

The company also believes that Tesla will provide more details about the Cybervan, a fully autonomous passenger vehicle that could enhance public transportation in the future. This prediction is based on Tesla's investor presentation in March 2023, which showcased Tesla's current and future vehicle lineup, including a teaser for a van-sized car.

Some Potential Wildcards

Building a robotaxi is one thing. Commercializing it is another. Tesla may be able to rely on the uniqueness of its vehicles and the fan power of the company to attract customers to use the ride-hailing service, but many people may be reluctant to switch to a service that may not be very reliable at launch.

One of the predictions is that Tesla may announce a partnership with Uber, which has proven its existing global ride-hailing platform attractive to autonomous vehicle companies. Over the past few weeks, Uber has been rapidly signing up AV companies, including Waymo, Cruise, Wayve, and others. Although Musk seems to want to go it alone, cooperation may be the best way to truly commercialize these vehicles.

Another possible wildcard is McDonald's involvement in some way, based on the fast-food chain's X post last week, which said, Chat's about to pop off 10.10. Musk replied with a crying-laughing emoji, so some kind of autonomous food delivery demonstration or announcement with McDonald's could be revealed on Thursday.

Things That Are Not Expected

There will be a lot of hype and discussion about Musk's autonomous driving future, during which the executive may make the same arguments about shared mobility possibilities as Uber did a decade ago—calling AV so easy and cheap that people don't need to own their own vehicles.

A beautiful picture, but a clear path to commercialization on Thursday will not be expected.

In the past, Musk has said that Tesla vehicles on the road today will be able to progress to full autonomy with just a software update, allowing car owners to add their cars to Tesla's shared mobility app and rent them out to earn extra cash. Tesla said it would take about 25% to 30% of the revenue from these trips, and in places where there are not enough people sharing cars, the car manufacturer will provide a dedicated fleet of robotaxis.

Musk has been promising a fully autonomous Tesla for years, but it has not yet been launched. Although Tesla has made progress in its advanced driver-assistance system, called Full Self-Driving (FSD), the technology is still not fully autonomous. It requires a human driver to stay alert behind the wheel and take over when necessary.

This is probably why Adam Jonas of Morgan Stanley, an undeniable bull on Tesla, said he expects Tesla to provide a 'dual' approach with respect to autonomous ridesharing. There will be a supervised autonomous/FSD shared mobility service, as well as a fully autonomous app-based Cybercab, he said, with an initial commercial release expected in late 2025 or 2026.

In terms of producing the Cybercab itself, analysts at Deepwater pointed out the lag between Tesla product reveals and increased production. The minimum interval for Model Y was 10 months, while Cybertruck took 48 months, and Semi is 79 months and counting.

Deepwater wrote: This suggests the start of production for any of the vehicles announced in August would begin in June of 2025 at the earliest.

Given that the robotaxi event was postponed to make some significant changes, the product may still have a long way to go before it is ready for production.

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