Elon Musk says his next product will be the most important Tesla has ever produced. And he says it's (finally) almost here

CNN

2 days ago

Will Elon Musk finally make good on six years of robotaxi promises?
Musk said in a social media post this week that Tesla's long-awaited robotaxi service will roll onto the streets of Austin, Texas on June 22. The Tesla CEO is betting the company's future on autonomous vehicles (AV) and a robotaxi service – which will hopefully inject much-needed cash just as the company's sales and profits are slumping.
While Musk is championing the promise of robotaxis – self-driving cars without a driver than can ferry around paying passengers – there are concerns about both safety and their viability as a business.
Traditional automakers like General Motors have already abandoned plans for a similar service despite spending billions, blaming the 'considerable' resources needed and 'an increasingly competitive robotaxi market.' Ford dropped its AV efforts altogether.
But even with their exit, some experts say the real competition for Tesla are the human drivers of Uber and Lyft.
'The challenge is less technological and more economic,' said Bryant Walker Smith, an affiliated scholar at the Center for Internet and Society at Stanford Law School, an expert in autonomous vehicles. 'If a company that needs to pay engineers and mechanic and remote assistance has to compete with Uber drivers who might be making less than minimum wage to maintain their own older vehicle, that's kind of hard to do.'
None of that has stopped Musk from making outsized projections about how the technology could reshape Tesla and the world.
'I don't see anyone being able to compete with Tesla at present,' Musk said during April's earning call about why he believes Tesla's robotaxi service will succeed. 'But at least as far as I'm aware, Tesla will have, I don't know, 99% market share or something ridiculous.'
Musk cautioned in his social media post that the June 22 date was tentative. Whenever it does kick off, though, Tesla will be playing catch-up to far more established services.
'There are real robotaxis on the road today. None of them is a Tesla,' said Smith.
That includes Google's Waymo, which is already providing 250,000 paid rides a week in four US cities – San Francisco, Los Angeles, Phoenix and Austin. Companies in China also have active robotaxi services.
Google parent Alphabet does not disclose the financial performance of its AV unit Waymo. But the segment of the company that includes Waymo reported a $4.1 billion loss last year, even as Alphabet poured in $5.6 billion.
That loss is little more than a rounding error for a company that reported net income of $100 billion. In contrast, Tesla last year reported net income of $7 billion, down 53% from 2023.
Waymo, which began as a paid service in 2020, is growing rapidly, with ridership up more than 50% in the last six months. Last month, it announced that its 1,500 vehicles had logged more than the 10 million paid rides – up from 5 million rides through the end of last year.
Uber – which has a partnership with Waymo in Austin – plans to expand the alliance into Atlanta next year. Uber CEO Dara Khosrowshahi told a Bloomberg technology forum last week that while he expects the company to rely on human drivers for years into the future, he sees a growing role for robotaxis.
'We want to help these players develop, by investing in them in some cases, and really by working with them to bring their product to market,' he said. 'These are technologies that are unbelievably promising, but they've taken billions of dollars to develop. It's one of those overnight success that has taken 20 years of development. But it's finally ready to hit the market and we want to help that ecosystem get there.'
For years after automated elevators were invented, building owners paid to have human elevator operators because people were worried about riding in an elevator without one.
Robotaxis could face similar safety concerns, experts say.
Smith said he's seen people grow comfortable with robotaxis after giving them a try, even though it's too early to say whether the driverless cars are safer than ones with a person at the wheel.
'I often see… people are really nervous about it getting in a robotaxi. And then they get in, and within literally minutes, (they're) on their phones, and they're checked out, it's normal,' he said.
Tesla's current self-driving technology, known as 'full self-driving' or FSD, uses just cameras, not radar or lasers known as 'lidar,' to detect obstacles in front of them.
Musk has mocked the idea of lidar, which is used on Waymo and some other self-driving cars, writing on X in March, 'People don't shoot lasers out of their eyes to drive. Just try Tesla self-driving today, which just uses cameras and AI, and you will understand.' He described lidar as 'expensive sensors that are unnecessary' and 'friggin stupid.'
While not using lidar gives Tesla robotaxis a cost advantage over Waymo, many experts consider lidar safer to detect obstacles – including people – in the road.
The National Highway Traffic Safety Administration has announced several investigations into the safety of Telsa's FSD, including a fatal accident in which a car using the feature hit and killed a pedestrian.
The car using FSD 'experienced a crash after entering an area of reduced roadway visibility…. from conditions such as sun glare, fog, or airborne dust,' said the agency's statement about the probe.
Smith said that those real-world experiences show the problem with using just cameras for detection.
'If you could enable drivers to have lasers shooting out their eye to avoid sun glare and things, it would be a good thing,' he said.
Tesla needs a turnaround. The company has experienced plunging sales and profits, including its first drop in annual sales last year and its biggest drop in quarterly sales, thanks in part to backlash against Musk's political activities.
Tesla's stock (TSLA), which hit a record high in mid-December on expectations that Musk's close ties to President Donald Trump would lead to Tesla-friendly policies, have plunged 30% since then.
Musk and his fans on Wall Street are convinced that Tesla will soon explode in value due to its AV capabilities and future robotaxi service, largely because self-driving robotaxis can operate more hours in a day than human driver.
'I think this will be the largest asset value increase in human history,' Musk told investors in January.
Tesla did not respond to a request for comment.
Musk has repeatedly projected the service will change life on the planet by radically reordering how people move around, while Tesla owners rent out their cars for the robotaxi service to generate a cash return.
But the Tesla CEO has been promising that his robotaxi service was a year away since at least 2019, only to fall short of those ambitious targets.
GLJ Research analyst Gordon Johnson predicts Tesla's robotaxi launch this month will be more flash than substance.
'This is a Tesla proof of concept exercise, not a rollout or a testing of a commercial asset for sale,' Johnson, a long-time critic of Tesla, wrote in a note to clients Tuesday.
And Smith doubts Musk will be able to live up to his current promises any better than the past ones.
'I don't know why anyone refers to things he says with any measure of credulity,' said Smith. 'When we're talking about the future, it's important to recognize that that future is not one that Tesla has demonstrated itself able to deliver.'