Tesla (TSLA, Financial) unveiled its highly-anticipated robotaxi, the Cybercab, but faced a sell-the-news reaction, dropping shares to one-month lows. The driverless vehicle features no steering wheel or pedals, with a design similar to the Cybertruck. CEO Elon Musk estimates the Cybercab will cost under $30,000 and be available by 2026.
TSLA has been discussing its robotaxi plans for years, updating progress during quarterly calls. However, the final product fell short of expectations, impacting investor sentiment.
- The timeline for the Cybercab's market entry is a major concern. Despite years of development and frequent updates on its full self-driving (FSD) technology, the vehicle is not expected until 2026. TSLA's history of delayed launches, like the Cybertruck, adds to the skepticism.
- Significant capital has been invested in scaling FSD and AI initiatives. TSLA projects over $10 billion in capital expenditures this year, with further funds needed for Cybercab development, potentially affecting short-term profitability amid ongoing economic challenges.
- Competition is intensifying. Companies like General Motors (GM, Financial) and Ford Motor (F, Financial) offer self-driving features, while Uber (UBER, Financial) partnered with GM's Cruise for autonomous technology. Google's (GOOG, Financial) Waymo has also been testing driverless vehicles for years.
- TSLA has previously downplayed competition, citing rivals' reliance on high-density mapping. Some OEMs have shown interest in licensing TSLA's FSD technology, highlighting its competitive advantage.
Overall, economic and competitive pressures contributed to TSLA's fourth consecutive earnings miss in Q2, with automotive gross margins shrinking significantly. The company's strategy focuses on volume over margins, banking on future success from new models, FSD, and the Cybercab. Investors are concerned about potential setbacks before the 2026 timeline.
