Tesla’s Historical Impact
In the last decade, Tesla (TSLA +0.62%) has become one of the world’s most discussed companies and stocks, causing cult-like fascination or irrational hatred, depending on who you ask. It is not surprising when looking at the company’s history: It has consistently delivered what was thought impossible, like high-performance electric vehicles (EVs), while simultaneously and consistently failing to meet its deadlines on promises made.
Add Elon Musk’s antics and controversial actions to the massive growth of the stock, which has made many ordinary “believers” instant millionaires and cost billions to short sellers, and you get the perfect recipe for a very intense debate over Tesla.
This is certainly not over yet, with an onslaught of announcements by the company that could indicate that Tesla is slowly shifting from an EV company to a much wider tech-focused company straight out of a science fiction movie.
The Big Robot Reveal
It has been many years since Tesla discussed the potential of deploying AI onto autonomous systems, including self-driving cars and humanoid robots. However, since the initial announcement several years ago, progress has been somewhat slow. So, Tesla’s critics started to claim that it was just a scam to boost Tesla’s stock prices and Elon Musk’s fortune, with very little behind the scenes.
To help put these criticisms to rest, Tesla recently organized an event showcasing, for the first time, its prototype robotaxi. The event was titled “We, Robot,” in a clear reference by sci-fi fan Elon Musk to Issac Asimov’s classic “I, Robot” novel.
Source: Elon Musk
Art Deco Robotaxis
A lot of Tesla’s extremely large valuation (just below $700B at the time of writing of this article) – which is much higher than comparable automakers – is hinged on the image of it being a tech company as much as it is a car manufacturer.
A central plan for Tesla’s future is to create the “robotaxi” or self-driving cars that will drive by themselves, not only replacing companies like Uber and taxi companies but also likely drastically reducing the need to own cars at all.
And it seems to finally be around the corner with both a small robotaxi car and a larger “robovan” being revealed at We, Robot. Interestingly, both take heavy inspiration from Art Deco, an art style popular in the 1920s and beloved by futurists.
Source: X
The design is also reminiscent of the designs used in the movie adaption of the I, Robot novel with Will Smith, leading to its director asking Elon Musk “for his designs back”.
Source: X
A Deeper Look
The robotaxi design, on the outside similar to other Tesla cars with a hint of a cybertruck rounded out, will have no steering wheels and will be a two-seater.
Source: DailyMail
Meanwhile, the Robovan will have up to 20 seats and will be designed for regular transportation of more people at a lower price.
Source: DailyMail
Speaking of price, Elon Musk intends for the robotaxi, renamed cybercab, to be below the $30,000 price range. This would convert into an average operating cost of the Cybercab over time of around $0.20 per mile.
It is clearly now the top priority for Tesla, after abandoning its plan for a $25,000 Tesla car in recent months.
And the robotaxi is the big one for Tesla, with Musk aiming for robotaxis and autonomous vehicles in general to propel Tesla to a $5T valuation.
Robotaxi Race Heating Up
Tesla is far from the only tech or car company with great hope for self-driving technology. Among the ones at the top of the race to create them can be mentioned:
Tesla’s Unique Approach To Self-Driving Tech
The intense competition can make the Tesla robotaxi announcement seem a little underwhelming, as it appears as just one tech company among many.
It would be ignoring the crucial differences between Tesla and every other autonomous driving company.
Multi-sensors Versus Cameras
All of Tesla’s competitors rely on a wide array of sensors like radar, LIDAR (radar-like detection, but with lasers), microphones, etc. for their self-driving vehicles. This provides a lot more data to the AI driving the car but also makes any autonomous vehicles very complex and expensive to build.
Instead, Tesla uses exclusively visual data from cameras. This makes the Tesla robotaxis much more similar to human drivers and leverages the fact that roads are designed for such data to be enough for safe driving.
It is why the unveiled robotaxi can realistically be in the $30,000 range, where, just by itself, the LIDAR system of most other autonomous cars would cost more than that.
Restricted Or Universal Autonomy
The other difference is that all of these solutions aim for limited applications, like robotaxis inside a city center, with essentially a custom AI design for that specific city and a permitting process on a case-by-case basis for each location.
Tesla has been aiming from the start for its robotaxis to be able to handle any place, without preexisting information about the location. Instead, it needs to actually understand and react correctly to the complex environment around it.
So, while Waymo’s approach could capture most of the taxi market in most cities, Tesla’s approach is a lot more ambitious and aims to change how we travel entirely.
Data Collection & AI Training
Another key difference is in the collection of data for training the self-driving AI. All the other autonomous driving companies had to build a fleet of custom vehicles modified with the added sensors and computers, and then test them in real streets with paid employees behind the wheel.
This is a costly approach that naturally limits the total volume of data, as each mile driven requires someone to be paid to drive an equally costly car.
Tesla collects data from every single Tesla car ever sold, each fitted with the 9 cameras that would be installed on an autonomous robotaxi. This gave Tesla a huge advantage in data collection. An advantage so huge that it makes the data collected by all its competitors combined look like a rounding error.
Source: ARK Invest
Self Driving Plans
Elon Musk aims for Tesla to have technically ready self-driving Tesla cars by 2025, the first “unsupervised FSD in Texas and California next year” with the Model 3 and Model Y the same year. However, the cybercab production is to be expected more by 2026 or 2027.
This should take into account that previous similar deadlines from Musk and Tesla have completely missed the mark, so it might be a little too optimistic.
There was also no date announced at all for the robovan, likely indicating that it is more of a concept car for the time being, with no production scheduled yet.
This also draws back to the first sales of FSD (Full Self Driving) systems in Tesla cars, as far as 2019. With a price oscillating between $5,000 and $15,000 over the years, this extra computing hardware was supposed to turn anyone’s Tesla car into a robotaxi when the tech would be released.
5 years later, and at least another 2-3 years before regulatory approval, it has become a point of contention between some Tesla fans and Elon Musk, feeling deceived by a narrative of imminent level 5 self-driving always 1-2 years ahead.
Markets’ Reaction
Technical Critics
The announcement came as a bit of a surprise on a few key points.
The first one is for the robotaxi to be a two-seater.
“Two-seaters have been proposed for decades as commuter vehicles. They just haven’t taken off,”
Sam Fiorani – Vice president at research firm AutoForecast Solutions.
Of course, this could be ignoring that two-seaters have not been popular as most people will want their commuting car to also occasionally carry more people.
But a robotaxi would be a vehicle purely dedicated to taxi work, not an occasional family car. So this design might actually still work, as the large majority of commute trips are done by one person alone anyway.
Another reason why Tesla is choosing this road is likely that the two-seater design improves a bunch of metrics for the future robotaxi:
- Lighter and smaller vehicles.
- Reducing weight and increasing the range of the battery pack.
- Reducing costs by requiring less material and less battery.
- Easier and quicker to mass produce so it can reach the market quickly.
- More private and more fit for grabbing the commuter market, which is mostly made of solo drivers or a couple.
In addition, if robotaxi gets approved by regulators on the road, so will likely be a regular Tesla with FSD hardware. So Tesla already produced plenty of four-seaters waiting to work as robotaxi.
Stock Reaction
It is likely that the market’s reception to the announcement is not what Elon Musk expected. On the first trading after the weekend reveal, Tesla stock price is down -8.7%.
Tesla, Inc. (TSLA +0.62%)
Tesla, Inc. (TSLA +0.62%)
A key problem is investors’ and analysts’ skepticism about the realism of Tesla’s plans.
“It will be extremely difficult for Tesla to offer a new vehicle at that price within that timescale.
Without external subsidies, or Tesla making a loss on every vehicle, it doesn’t seem plausible to launch at anything close to that price this decade,”
Paul Miller – Research firm Forrester on BBC
The concern about safety and regulatory approvals is also persistent. It is unclear how many miles can be traveled without human intervention, and if the safety of the current FSD is enough for regulators to let the car “loose” out of limited geofenced areas.
In that respect, the recent political activism of Musk, as well as its claims of SpaceX being persecuted for political reasons, might raise a few eyebrows among worried investors.
Source: X
Optimus Robots
The other stars of the “We, Robot” party were the humanoid Optimus robots. They were seen making conversation, acting as bartenders, and even … dancing?
Source: DailyMail
While at first, Optimus robots looked like they were fully autonomous robots of the kind Isaac Asimov dreamed of, it was later revealed that most were essentially puppeteered by actual humans.
Source: Jason Smith
Optimus has long been touted by Musk as the future of Tesla factory workers, with 2 already at work on a Tesla factory floor. Tesla has also revealed concept images of Optimus being used for package delivery.
Source: Sawyer Merritt
Overall, even if still remotely operated, it is likely the sort of task that Tesla has in mind for Optimus. And it might make economic sense.
For example, if combined with an autonomous delivery vehicle, the Optimus could be the robotaxi passenger, to carry packages and navigate up to a front porch, a task very difficult to achieve for non-humanoid robots.
Once the delivery is done, the human operator can be switched to another Optimus to perform the same task, while the first one is heading for its new delivery address.
This way, package deliveries for 5-10 trucks could be done by only one human operator.
Tesla Semi Truck
Almost unnoticed in the onslaught of discussions and debates around robotaxi, robovans, and Optimus robots, was the very positive feedback given by DHL over its testing of Tesla Semi, the company’s electric heavy-duty truck.
The trial included one long haul of 390 miles (625 km) – fully loaded with a gross combined weight of 75,000 pounds (34 metric tons) – confirming the Tesla Semi’s ability to carry typical DHL payloads over a long distance on a single charge.
During the trial, the trial vehicle averaged 1.72 kWh/mile operating at speeds exceeding 50 mph (80 km/h) on average for over half its time on the road. The result exceeded our expectations and even Tesla’s own rating.
So, according to DHL, one of the largest and most exigent logistical companies in the world, “Our verdict: The Tesla Semi is ready for prime time!”.
This is a very important step not only for Tesla or DHL but also for EVs in general. Trucking is a massive energy user, and so far, the weight of batteries, charging times, and limited autonomy have put into doubt whether an electric heavy truck could ever become commercially viable.
Overall, the test results with DHL and other companies like PepsiCo indicate the Semi might be ready for prime time, especially with Tesla release data that one single Semi unit alone has driven over 248,000 miles after just 18 months.
As a result, it is now evaluating how to integrate the Semis into its fleet, and Tesla is likely looking to mass production of Tesla Semis by 2026.
SpaceX – Tesla Synergies
Even if investors are getting a little skeptical of the robotaxi announcement, and especially its deadlines, this week was not a good one for the critics of Elon Musk.
Right after the “We, Robot” event, SpaceX managed the astonishing feat of catching mid-flight a reusable rocket for the first time in history.
As videos can fail to give a perspective, it must be noted that the Starship launcher caught by SpaceX “Mechazilla” is as big as a 20-story building and weighs 100 tons (Mechazilla is itself 250 tons).
And it was done a mere few years after reusable rockets were proven possible.
Overall, this put to rest the idea that Musk would be only delivering hype and is unable to achieve groundbreaking technological achievements.
Besides the potential reputation overlap between all of Musk’s ventures, there have been quite a few cross-operations between Tesla and SpaceX over the years:
- The first car launched in space was a Tesla Roadster.
- The grid fins on SpaceX’s Super Heavy rocket booster are powered by electric motors supplied by Tesla.
- The Cybertruck’s exterior is made from the same proprietary stainless steel alloy as SpaceX’s Starship.
- Low latency, space-based Internet Starlink constellation could be integrated into Tesla vehicles, especially the Starlink Mini and future robotaxis and/or Optimus.
- Both companies share the company jet. In 2016, Tesla paid SpaceX approximately $1.1 million for use of the corporate jet.
So overall, even if markets were a little underwhelmed by the robotaxis announcement, the “Musk brand”, in very large part responsible for holding up Tesla stock prices, is still very strong.
Source: Tesla Hype
And of course, if Starships start doing Mars or Moon landings soon, Starlink-teleoperated Optimus, self-driving space rovers, and large battery packs, all provided by Tesla, might be on the menu.
Conclusion
Tesla is a company that has already changed the automotive world once, by demonstrating that electric cars could be highly desirable luxury goods, instead of under-powered green gold carts.
It is now looking to do it again, with an assault on 2 fronts:
- The very publicized and somewhat late autonomous vehicles tech.
- The unique technical approach chosen by Tesla is both the most ambitious and the most risky in the whole industry, guaranteeing either a costly failure or a massive success, with not much in between.
- The electrification of trucking and heavy-duty logistics, repeating for this segment what the Tesla Roadster did for EVs in 2010.
Both segments could give the company access to large addressable markets, and more importantly, markets where competitors are lagging compared to Tesla’s technology.
As EV sales are becoming increasingly competitive (notably with the arrival of Chinese EVs onto global markets), this could be a breath of fresh air for Tesla’s investors, who are betting the current valuation correctly reflects the ability of the company to release technological revolution previously thought impossible.
And if SpaceX’s recent landmark achievement is used as a reference, that Elon Musk is still the most powerful tech mogul in the hardware space.
