As Tesla’s electric vehicle sales decline and earnings drop by 45% this quarter, CEO Elon Musk seeks to shift the company’s focus away from the automobile industry to robotaxis – driverless taxis that can operate anywhere and at any time.
In 2020, Mr. Musk announced Tesla’s goal to sell 20 million cars annually by 2030, compared to Toyota, the largest automobile manufacturer, which sold 11 million cars in 2023. Currently, Tesla has achieved nearly 10% of that goal by selling 1.8 million cars a year. However, amid declining car sales due to more legacy car makers joining the EV market, Mr. Musk stated in a conference call that the company’s focus on the car business is misplaced and that they are close to perfecting the driverless vehicle. He claimed that this advancement would launch Tesla’s market valuation past $1 trillion, urging stockholders to hold on to their stocks and continue buying.
There have been questions raised about how Tesla will be able to turn a profit and how much money they will make. Tesla’s new robotaxi will face serious competition within the industry from companies such as Waymo, Uber, Lyft, Zoox, and Cruise. “It’s a supercompetitive business that’s barely profitable,” said Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management. Additionally, last year, Cruise discontinued its driverless taxi service after one of its vehicles struck a pedestrian and dragged her for 20 feet in San Francisco.
Another question posed is if it is currently feasible for Tesla to provide such a service. Currently, Tesla offers two types of driver-assistance software: Autopilot and Full Self-Driving. While the company has been working on these two services for years with promises that they are just months away from creating the perfect system without human assistance, it has been proven time and time again that the software still requires human intervention. “You’re trying to solve the hardest problems,” said Philip Koopman, an Associate Professor of Electrical and Computer Engineering at Carnegie Mellon University. “I’d be surprised if Tesla could pull off a ‘no kidding’ robotaxi in the next 10 years without sensors and maps.” Furthermore, according to the National Highway Traffic Safety Administration, there have been hundreds of accidents and 29 deaths due to the use of Tesla’s driver assistance software.
Tesla’s shift toward focusing on robotaxis is a bold move, especially considering the decline in earnings and the feasibility of such a project. If this project isn’t as successful as Mr. Musk predicts, it could spell disaster for Tesla.
In 2020, Mr. Musk announced Tesla’s goal to sell 20 million cars annually by 2030, compared to Toyota, the largest automobile manufacturer, which sold 11 million cars in 2023. Currently, Tesla has achieved nearly 10% of that goal by selling 1.8 million cars a year. However, amid declining car sales due to more legacy car makers joining the EV market, Mr. Musk stated in a conference call that the company’s focus on the car business is misplaced and that they are close to perfecting the driverless vehicle. He claimed that this advancement would launch Tesla’s market valuation past $1 trillion, urging stockholders to hold on to their stocks and continue buying.
There have been questions raised about how Tesla will be able to turn a profit and how much money they will make. Tesla’s new robotaxi will face serious competition within the industry from companies such as Waymo, Uber, Lyft, Zoox, and Cruise. “It’s a supercompetitive business that’s barely profitable,” said Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management. Additionally, last year, Cruise discontinued its driverless taxi service after one of its vehicles struck a pedestrian and dragged her for 20 feet in San Francisco.
Another question posed is if it is currently feasible for Tesla to provide such a service. Currently, Tesla offers two types of driver-assistance software: Autopilot and Full Self-Driving. While the company has been working on these two services for years with promises that they are just months away from creating the perfect system without human assistance, it has been proven time and time again that the software still requires human intervention. “You’re trying to solve the hardest problems,” said Philip Koopman, an Associate Professor of Electrical and Computer Engineering at Carnegie Mellon University. “I’d be surprised if Tesla could pull off a ‘no kidding’ robotaxi in the next 10 years without sensors and maps.” Furthermore, according to the National Highway Traffic Safety Administration, there have been hundreds of accidents and 29 deaths due to the use of Tesla’s driver assistance software.
Tesla’s shift toward focusing on robotaxis is a bold move, especially considering the decline in earnings and the feasibility of such a project. If this project isn’t as successful as Mr. Musk predicts, it could spell disaster for Tesla.