A robotaxi is not enough to solve Tesla’s problems, says analyst. This is what Elon Musk needs to do.

By | April 13, 2024

Elon Musk Tesla

Wedbush analysts say Tesla should focus on releasing a sub-$30,000 car in the next 18 months.Justin Sullivan/Getty Images

  • Wedbush analysts said Tesla ditching a cheaper electric car in favor of robotaxis would be “a debacle.”

  • Reuters reported that Tesla has halted development of its affordable electric car to focus on a robotaxi.

  • Wedbush believes full autonomy won’t be achieved until 2030, making an affordable Tesla ‘critical’.

The robotaxi that Tesla CEO Elon Musk teased would be unveiled by the end of the year is not what the company should focus on in the near term, according to a leading analyst firm.

Instead, it is “critical” that Tesla delivers a sub-$30,000 car in the next 18 months, Wedbush analysts wrote in a note published Thursday.

The analysts said that while an upcoming Tesla robotaxi unveiling is an exciting announcement, full autonomy isn’t expected until 2030.

“If robotaxis is seen as the ‘magic model’ to replace the Model 2, we would consider this a negative debacle for the Tesla story,” the analyst said. “It would be a risky bet if Tesla were to abandon the Model 2 and go straight to robotaxis.”

The Wedbush letter comes after Reuters reported on April 5 that Tesla was holding off on developing the $25,000 electric vehicle to put more resources into self-driving cars. The report cited internal company reports and sources familiar with the situation.

Musk responded to the report, saying “Reuters is lying (again)” in one message on Xformerly Twitter.

Later on April 5, Musk posted on X that Tesla will unveil its robotaxi on August 8.

The possible unveiling date comes after Musk spent years discussing how Tesla’s self-driving software, which currently requires an attentive driver at all times, could ultimately make its cars more valuable if owners could generate money by offering fully autonomous rides to others when they do not use it personally. their vehicles.

Musk has long focused on self-driving cars

Musk said in a 2022 interview that Tesla’s “overwhelming focus” is solving fully autonomous driving.

“It’s really the difference between Tesla being worth a lot of money or essentially zero,” Musk said in the interview.

Tesla’s CEO has said that new cars are rapidly losing value and car companies are making money from selling existing fleets.

Tesla’s Full Self-Driving software beta, or FSD, is currently classified as “level two” in an industry standard that goes up to six. The software still requires full human supervision. Numerous crashes involving Teslas have led to investigations by safety authorities and lawsuits.

Other car manufacturers are also exploring fully autonomous driving.

Apple was rumored to be designing such a vehicle, before reportedly deciding to scrap the project entirely due to continued delays and technological limitations.

Self-driving cars are not yet sold on the market. But Waymo is testing self-driving models in Los Angeles and parts of the Bay Area, although it issued software recalls in February after two of its vehicles, which had no passengers at the time, crashed into the same towed pickup.

GM’s Cruise, which had halted its autonomous vehicles, will also resume testing its vehicles in Phoenix, but for now with human drivers. The company lost its California license in October after one of its vehicles ran over and dragged a pedestrian who the company said was first struck by another vehicle.

Meanwhile, a number of Chinese tech companies such as Baidu and Didi have quietly stopped testing self-driving cars on roads, following mounting pressure from lawmakers and public criticism over safety issues.

Musk has also discussed the value of a more affordable Tesla

Musk has also been emphasizing the importance of a cheaper Tesla model for years.

“This has always been our dream, from the beginning of the company,” Musk said during Tesla’s “Battery Day” presentation 2020.

As the lack of low-cost options prevents some customers from making the switch to EV vehicles, Tesla has experienced reduced demand. The company has tried several times to lower prices to better compete with companies like BYD.

The company recently announced that quarterly shipments fell significantly short of Wall Street’s lowest expectations, posting its first quarterly year-over-year decline since 2020.

“For Musk, this is a turning point in guiding Tesla through this turbulent period, otherwise dark days could lie ahead,” Wedbush analysts wrote in the letter.

With ongoing issues around Tesla’s margins and demand, analysts say Musk needs to “regain trust in the eyes of the Street.”

Former Tesla CEO and co-founder Martin Eberhard also weighed in on the Reuters report on Tesla’s scrapped Model 2 earlier this week, saying it would be a “shame” if the company dropped it.

Eberhard also said this could benefit China, which has been gaining market share against Tesla thanks to its affordable electric cars.

Read the original article on Business Insider

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