Tesla's Texas robotaxi launch: Expect it to be 'low-key'

Yahoo

a day ago

Tesla's (TSLA) robotaxi will tentatively launch in Austin, Texas, on June 22, according to CEO Elon Musk. CFRA analyst Garrett Nelson thinks this launch will be more of a "low-key" event compared to its big "Cybercab" debut last year. IN the video above, you can hear more of Nelson's take on the launch and why he thinks the stock has some near-term headwinds.
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What are you expecting from this robo taxi launch?
Yeah, thanks for having me. We think it's going to be a lot more low-key than the robo taxi day that Tesla held in Los Angeles last October, which was on a Hollywood movie set, very different type of production. I think this is going to be much more low-key. October or sorry, June 22nd is a Sunday, which is very unusual to have a major product launch, but I don't think that's a coincidence. So, I think it's, you know, expectations are high coming into this, but I think the key is really what happens in the three to six months following this event. So, initially, it's only going to be maybe a dozen or so model wise with the most recent version of full self-driving installed on them, operating in a geofenced area of Austin with the vehicle being supervised remotely as well. So, I think a lot of people are going to say, well, why is this so special? You know, what is Tesla doing here that Waymo isn't already doing with the robo taxis that they are operating in Austin. And I think people are going to look at the size of the geofenced area. Waymos is 37 square miles. How quickly they can expand that geofenced area, and then how quickly they can increase the number of vehicles on the roads and also then expand to other markets.
What is the time framing for that scaling that would lead you to then raise your own rating and expectations on the stock?
Well, Elon Musk thinks they can have maybe a thousand or so on the road by the end of this summer. It seems a bit optimistic, but we'll see. Our main concerns with this stock right now are number one valuation, given this really dramatic rebound since their first quarter earnings release in April. The stock is up, you know, about 100 points from when they reported earnings, only six or seven weeks ago. So, it's valuation at north of 110 times our EPS estimate for next year, but also ongoing market share losses across their three major markets of China, Europe, and the US. That has continued. You look at the China data, Tesla sales were down 15% in May. Meanwhile, total EV sales were up 38% in China. So, in Europe and the US, it's kind of a similar story. So, those near-term issues really concern us here. We know we're right around the corner from their second quarter deliveries report, which will happen in about three weeks. I don't think that's going to be a great release. And so there's some major near-term challenges and valuation being an issue for us also. In addition to the Big Beautiful Bill, in which Tesla will be losing their tax credits, not only on EVs, but for energy storage and solar products as well.