Musk promotes robotaxi in attempt to save Tesla’s falling shares

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(Bloomberg) — When Elon Musk announced he would unveil a Tesla Inc. robotaxi in August, it was an apparent effort to halt the spiral for the once high-flying carmaker.

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Tesla shares were already sinking last week before the company reported weak quarterly delivery figures. Then, Reuters reported that the automaker was shelving plans for a cheaper electric vehicle, expanding the tailspin. Musk’s vague denials didn’t help matters — the stock closed Friday as the worst performer in the S&P 500 this year.

So the chief executive turned to his tried-and-tested strategy: change the narrative by introducing a new product. Shares surged in late trading late last week and traded up 4.2% at the start of Monday’s premarket session.

Spectacular events have long been part of Tesla’s strategy for making waves while spending next to nothing on traditional advertising. Musk has mastered the art of keeping investors focused on the future rather than current problems. But there’s usually a wait of years between when he unveils the prototype and when Tesla actually starts production.

As far as robotaxis are concerned, Musk has failed to live up to more than a decade of predictions about autonomous vehicles.

“Investors need to curb their enthusiasm somewhat with this stock and its various product announcements, as there is a wide gap between hype/speculation and reality,” Adam Crisafulli, founder of analysis firm Vital Knowledge, said by email. ” “This seems to be an example of Tesla trying to distract from the current EV market conditions, which are very disappointing at this time.”

promise of autonomy

When Tesla began work on the system marketed as Autopilot in 2013, Musk estimated that it would be able to handle 90% of the miles driven by customers within a few years. In 2016, Musk hinted at autonomy in the second iteration of his master plan. The company started selling a feature called Full Self-Driving, which even after eight years doesn’t live up to its name.

In 2019, Musk announced that 1 million Teslas would soon be on the road and fully capable of driving themselves. He first hinted at plans for a dedicated robotaxi three years later.

A similar pattern has emerged with other products as well. Take the Semi truck, a prototype of which Tesla showed at its design studio near Los Angeles in 2017. Years later, the Semi is still in pilot production only.

In 2019, chief designer Franz von Holzhausen broke the glass window of a stainless steel Cybertruck prototype. Years later, future pickups may be spotted infrequently in cities like Austin and Los Angeles, but sales are so low that Tesla has yet to report figures in its quarterly reports.

‘stay tuned’

Tesla has suggested that its next-generation vehicle platform will underpin both an affordable car and a dedicated robotaxi, and there is speculation that the vehicles will be very similar: one will have a steering wheel, the other will not.

On Sunday morning, von Holzhausen drove his matte black Cybertruck to give a speech at the Peterson Automotive Museum in Los Angeles, where he was surrounded by Tesla fans for selfies and autographs. When asked if Tesla’s $25,000 vehicle was canceled, deprioritized or delayed, he demurred.

“I would just say, stay tuned,” von Holzhausen said. “Don’t always believe what you read.”

Tesla has introduced the latest version of Full Self-Driving, or FSD, to a growing number of consumers in recent weeks, some through free trials. On Friday, the company announced that customers have collectively driven more than 1 billion miles using the feature.

“Because FSD progress is so fast right now, I think Elon just said ‘Let’s focus on this and let’s focus on making a $25,000 car cool,'” said Mike Moon, a Tesla shareholder who attended an EV event at the Peterson Museum. Put it in the bag.” Moon said about 30% of his investment portfolio is Tesla stock and he is buying more shares.

‘Essential’ software

The promise of full autonomy has long been how Tesla has set itself apart from rivals. The company charges $12,000 for FSD in the US, a sum that will offset some of its recent price cuts – but only if Tesla can convince more customers the feature is worth it.

Cole Wilcox, CEO of Longboard Asset Management, said, “To maintain market leadership, Tesla needs both affordable cars and full self-driving – but FSD is more important.” “Software and services is a much better business model than manufacturing.”

Musk has also said the same. “It is necessary,” Musk said about solving self-driving in June 2022. “It’s really the difference between Tesla being worth a lot of money and basically zero.”

Whether investors are willing to buy Musk’s latest moonshot will become clear in the coming weeks, as Tesla is scheduled to report first-quarter earnings on April 23.

Vital Knowledge’s Crisafulli said Tesla investors should take the robotaxi hype seriously.

“On the one hand, this implies the existence of fully autonomous driving systems, which could be a very attractive new revenue stream,” Crisafulli said. “But as of now, no such system exists.”

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