Tesla Stock Falls After Lackluster Robotaxi Event: Time to Buy the Dip?
- by AOL
- Oct 19, 2024
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(NASDAQ: TSLA)
hosted an event called "We, Robot" last week to display its prototype-autonomous vehicles and humanoid robots. Investors were disappointed. Tesla shares are now down 10% in the last five trading days (as of this writing) as Wall Street gets increasingly skeptical on how material the "Cybercab" and Tesla Optimus Bots will be to the company's bottom line anytime soon.
As usual, this event came with a lot of fanfare, drama, and promises from Tesla CEO Elon Musk. Will the company make good on what he said? And should you buy the dip on the stock? Time to analyze the potential of these new products and whether they can add trillions of dollars to Tesla's market cap as Musk has prophesized.
More Musk promises
Tesla has been working on self-driving vehicle technology for more than a decade. Musk has promised numerous times that the company was on the verge of bringing full self-driving software to Tesla vehicles, usually within a few years. Most famously -- or perhaps infamously -- he said in 2019 that there would be 1 million "robotaxis" on the road by the end of 2020. This didn't happen.
Last week had a similar feel. Musk came to the event in what Tesla is calling a Cybercab, a futuristic-looking taxi with doors that open vertically. They also debuted a prototype for a self-driving van in the same style. According to the company, the Cybercab will go into production in 2026, but it gave no timeline for the van. Tesla wants to build these vehicles and the associated self-driving software to attack Uber's business, allowing owners and/or Tesla itself to use this fleet of vehicles to operate a ride-sharing network with zero human drivers. If successful, it has the potential to radically lower the cost of taxi rides.
On top of the robotic vehicles, Tesla made a big push to highlight its research into the Tesla Optimus Bot, which is a robot that looks like a human. Tesla claims the robot will be able to do any task you ask it to. In typical Musk fashion, he was optimistic about how much value it could bring to Tesla, projecting upwards of $25 trillion in value added to its market cap just from the Optimus product line. It is unclear what analysis led him to come to this conclusion.
Practicality remains to be seen
There are a lot of numbers thrown around by Tesla when it comes to robotics: Millions of robotaxis; trillions of dollars in market value. There is also a lot of bark coming from the company. However, there is not much bite in the form of real products getting sold to customers today.
If I was a Tesla investor, I would be worried that this is just another event with announcements for products that eventually get delayed. Tesla seems to be betting its future on artificial intelligence (AI), robotics, and autonomous vehicles. But so far it's only built prototypes. Its current full self-driving software is a bit of a misnomer in that it still needs humans operating the vehicle. Unlike Waymo, which has licenses to operate a fleet of actual robotaxis in cities across the United States, Tesla's self-driving network is nothing more than an idea right now.
There should also be concerns about the Optimus Bot prototype. It has come out in the days following the event that the bots were being remote-controlled by humans when interacting with guests. This is not exactly close to the autonomous robot that Musk has promised; it's also misleading investors and the company's biggest customers.
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