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Tesla shares slide as Robotaxi event disappoints

AInvestFriday, Oct 11, 2024 10:29 am ET
2min read

Tesla's highly anticipated robotaxi event, dubbed "We, Robot," fell short of investor expectations, leaving many analysts disappointed by the lack of concrete details and timelines. While the event showcased Tesla's vision for its Cybercab, including a design with no steering wheel or pedals and a target cost under $30,000, it lacked updates on production schedules or clear regulatory paths. Analysts from firms like Bernstein and RBC described the event as underwhelming and criticized the absence of new information on Tesla's low-cost vehicle production or the Cybercab's practical implementation in real-world scenarios.

The absence of a concrete timeline for Tesla's fully autonomous capabilities and the focus on branding rather than technical specifics led to mixed reactions from the investment community. Oppenheimer noted that the event did little to clarify Tesla's ability to leverage its data and cost advantages to dominate the self-driving vehicle market. The lack of updates on Tesla's Full Self-Driving (FSD) technology and its reliance on a vision-only approach left analysts questioning the company's readiness to compete with more advanced autonomous driving systems.

From a competitive standpoint, the event was viewed as a relative win for Uber, which saw its stock rally following the presentation. Analysts from firms like Jeffries and Citigroup noted that the lack of immediate threat from Tesla's Cybercab reduced concerns for Uber's market position, allowing the ride-hailing giant to focus on its fundamentals. With Tesla's self-driving ambitions seeming like a longer-term challenge, Uber's short-term outlook remains strong, bolstered by its partnerships with companies like Waymo and its solid Q2 results.

Tesla's unveiling of the Robo-Van and other futuristic concepts at the event did little to change the immediate market dynamics, as many investors were hoping for a more definitive timeline and details about Tesla's competitive strategy in the autonomous vehicle (AV) space. Wells Fargo and other analysts expressed skepticism about Tesla's ability to secure regulatory approval and reach full Level 5 autonomy within the stated timelines. The event's lack of focus on these critical hurdles left many feeling that Tesla's long-term vision remains uncertain.

Despite some impressive technical displays and the physical reveal of the Cybercab, Tesla's failure to address key investor concerns led to a significant sell-off in its stock, which fell nearly 9% after the market opened. Many analysts noted that while the company's technology is groundbreaking, the absence of a lower-cost Model 2 vehicle and concrete production details left a gap in Tesla's narrative. Investors were particularly disappointed by the limited discussion on how Tesla plans to overcome regulatory challenges in the AV space.

Elon Musk's brief presentation at the event, which mainly reiterated previous statements, did not help to allay concerns about his level of engagement with Tesla amid his many other ventures. The brevity and lack of new information in Musk's speech led some to speculate whether his attention is too divided across his numerous projects. The market's reaction suggests that investors are looking for more focused leadership and a clearer roadmap to executing Tesla's ambitious plans.

While some analysts, like those from Piper Sandler and William Blair, acknowledged the potential long-term benefits of Tesla's robotaxi vision, they remained cautious about making upward revisions to their estimates based on the limited information provided. The consensus among many experts is that while Tesla's technological capabilities are impressive, the company still has significant hurdles to clear before it can disrupt the AV market on a large scale. Investors are likely to remain skeptical until they see more concrete evidence of progress in areas like regulatory compliance and production efficiency.

In conclusion, Tesla's robotaxi event, while ambitious and filled with innovative concepts, was seen by many as a missed opportunity to deliver on investor expectations. The lack of clarity around production timelines, regulatory approvals, and competitive strategy raised doubts about the company's near-term potential to dominate the autonomous driving market. This perceived weakness has been a short-term boon for competitors like Uber, which benefited from the event's outcome as Tesla's stock struggled to maintain its recent gains.

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