Tesla Shares Tumble on Robotaxi Delay, but the Bleeding Isn't Finished Yet

While China is celebrating Baidu's autonomous ride-hailing service, "Apollo Go," which could replace traditional taxis, Tesla, the acknowledged leader in the autonomous field, seems to be faltering. The shares plummeted over 8% on Thursday, wiping out $70.7 billion in market value after news broke that the release of its Robotaxi would be delayed from August to October.

This also halted Tesla's 11-day winning streak, bringing its market value down to $768.7 billion. The downward trend continued after hours, with a nearly 2% drop. With autonomous driving competition falling short of expectations, traditional ride-hailing platforms Uber and Lyft surged over 6% and 4%, respectively, on Thursday.

Tesla's delay is to give the team more time to build prototypes, according to Bloomberg. People familiar with the decision revealed that the delay had been communicated internally, and the design team was informed this week to modify certain elements of Robotaxi.

Notably, Musk, who is usually very vocal on social media, has remained unusually silent this time, indicating that the news is not unfounded. His silence has only made investors more anxious.

Tesla's current valuation is driven by three major factors: deliveries, Full Self-Driving, and the energy storage business. With improved delivery data in Q2 and a boom in the energy storage business, many investors have renewed their bets on Tesla's growth momentum, hoping that the FSD business will allow Tesla to be truly valued as an AI stock. However, this news may shatter the hopes of bullish investors.

Musk has never disappointed when it comes to making grand promises. As early as 2015, he claimed that Tesla's cars would achieve full autonomy within three years. Then, in 2019, he stated there would be a million robotaxi-ready vehicles on the road the following year. During the earnings call in April, he reiterated, If somebody doesn't believe Tesla's going to solve autonomy, I think they should not be an investor in the company.

Considering the repeated delays of the Cybertruck and Semi, Tesla's latest move is not surprising but has certainly shaken the confidence of bullish investors. Even if Robotaxi is launched this year, it is likely to be just a showcase like the humanoid robot Optimus, and the actual implementation and launch will still take some time.

Reports in April indicated that the California DMV and the California Public Utilities Commission (CPUC) stated that they had not received any application from Tesla for a permit to operate autonomous vehicle services in the state. California is the most populous state in the U.S. and a global hub for autonomous driving. If Tesla is not testing in California, it will face even greater challenges in rolling out across the U.S.

Tesla's leading position in autonomous driving is undisputed, but Musk's continuous grand promises and repeated delays have led investors to reassess whether their all-in approach might be too reckless. As for the highly anticipated delay in autonomous driving, whether Musk will come forward to debunk the rumors or remain silent will be a major test for investors.