Tesla's Robotaxi Unveiling: A Pivotal Moment for the Company's Future

Tesla drops bombshell ahead of anticipated robotaxi event

On Oct. 10, Tesla CEO Elon Musk (TSLA) is expected to present a Hollywood-style spectacle, as he will lead the highly anticipated "robotaxi event" at the Warner Brothers studio backlot. The event itself, initially intended for August 8, is said to be a major product announcement for some of Tesla's more ambitious projects, such as the "Cybercab" robotaxi and a possible $25,000 electric car. Don't miss the move: Subscribe to TheStreet's free daily newsletter On Oct. 2, Tesla reported its delivery numbers for the third quarter of 2024, which were up 6% from the same period the year before. But despite the positive news, the numbers still slightly failed to meet analysts' expectations. Additionally, a new report shows that Tesla has another bombshell to drop before its marquee event. Sayonara to a long-time Tesla executive According to internal sources who have spoken to Bloomberg, Tesla has lost its top data-related executive just days before it is set to hold its Robotaxi event on Oct. 10. Tesla employees were informed that Nagesh Saldi, the automaker's Chief Information Officer (CIO) has departed the company. In his now-former position as CIO, Saldi reported directly to Elon Musk and was responsible for building out much of the company's computing capacity in preparation for its big shift to artificial intelligence and robotics. Some projects he undertook included building out Tesla data centers in Austin, Texas, and Buffalo, New York, as well as developing bespoke enterprise software known as Tesla One. Saldi has been with Tesla since 2012, previously working for other Silicon Valley staples such as Hewlett-Packard (HP) and Infosys. He was elevated to the CIO position in 2018 in the midst of a production ramp-up. The former CIO is the latest in a small exodus of key Tesla executives from their positions. Drew Baglino, the former senior vice president, and Rohan Patel, the former head of government affairs, departed from Tesla in April this year. Allie Arebalo, its former HR head, left for Musk-less pastures just a month later. More Business of EVs: Tesla Bulls are still believing Despite the executive shakeup at the company, the biggest believers in Musk and Co. are still on the bandwagon going into Oct. 10. Notoriously, the latest note from Wedbush Tesla bull Daniel Ives published Friday did not mention the executive shift, but rather relayed a message of stellar confidence for the company going into the anticipated Robotaxi event. "We believe Robotaxi Day will be a seminal and historical day for Musk and Tesla and marks a new chapter of growth around autonomous, FSD, and AI future at Tesla," Ives said in his note. "We continue to believe Tesla is the most undervalued AI name in the market and we expect Musk & Co. to unveil some 'game changing' autonomous technology at this event next week." He reiterated his belief that Tesla is more than "just an EV vendor" and that its push into AI and robotics will be a key turning point in the future. "We continue to believe AI/FSD represents a $1 trillion of value alone for Tesla over the coming years," he said. "Next week, it's time for Musk to have a watershed unveiling event to kick this AI era off at Tesla." Wedbush maintained an "Outperform" rating and $300 price target for Tesla stock. Tesla Inc. trades on the NASDAQ as TSLA and is up 3.6% Friday, trading at $249.33 per share. Related: Veteran fund manager sees world of pain coming for stocks

Tesla robotaxi show - what to watch

Why it matters: With new competitors eating into Tesla's electric vehicle market share, Musk is now betting the company on artificial intelligence, including robotaxis. Driving the news: The billionaire CEO will host an event on Oct. 10 in Los Angeles, where he's expected to reveal a Cybercab prototype and share the latest advancements in Tesla's full self-driving (FSD) technology. The show at Warner Bros. studios will no doubt be another Musk special, with lots of hype describing it as a product everyone said was impossible. What we're watching: There are a multitude of unanswered questions about whether the technology is ready, and how a Tesla robotaxi business would work. Images of a heavily camouflaged vehicle surfaced online recently, but until the actual Cybercab is revealed, the big question is: Does it have a steering wheel and pedals? That isn't likely. General Motors tried for years to get such an exemption, finally giving up and scrapping its own purpose-built Origin robotaxi in July, citing "regulatory uncertainty." Musk has been adamant, however, that Tesla build a truly revolutionary robotaxi without a steering wheel or pedals. The technology claims Musk has said Tesla will be ready to launch its robotaxi service next year, but he's famous for saying "I'd be shocked if (such-and-such) didn't happen next year" -- only to move the goalposts again and again. What we know is that Tesla has chosen a different development path than many others, including Waymo, the market leader, whose robotaxis are already operating in several cities. Tesla's advantage: It collects tons of video snippets of everyday driving from its own fleet of 2.2 million cars on the road, giving it a large data sample. Tesla already faces scrutiny from federal auto safety regulators for hundreds of crashes in which its Autopilot technology failed to protect drivers and passengers. The robotaxi business The Cybercab -- if cleared by regulators -- would be the basis for a future Tesla robotaxi service. And don't be surprised if Musk unveils an Uber-like ride-hailing app as part of the event. The bottom line: Tesla watchers have questions. We'll see if Musk has answers.

Tesla could have a tough time living up to the hype around its robotaxi event

Tesla shares are ripping ahead of the electric vehicle company's robotaxi debut, but Wall Street is growing skeptical that this event will yield something that will add to the company's bottom line anytime soon and justify the stock's run-up. The stock is up nearly 22% in September as investors pile in ahead of Tesla's "We, Robot" robotaxi unveiling on Oct. 10 in Los Angeles and its third-quarter delivery report expected next week. The robotaxi will likely aim to be a self-driving vehicle that owners can authorize to be used as part of an Uber-style ride-hailing network. The recent hype lifted Tesla's stock into positive territory for the year, and it's now up nearly 5% in 2024. It's a major turnaround for a name that suffered its worst day since 2020 in late July after a massive earnings miss . Shares were under pressure earlier this year as Tesla cut prices on its cars in the U.S., Europe and China . In order for Tesla to live up to the hype of "We, Robot," Wall Street anticipates the company will unveil a prototype of its Cybercab robotaxi. Investors also expect Tesla to reveal advancements in its driver assistance features, known as Autopilot and Full Self-Driving (FSD), and artificial intelligence capabilities. Investors will also seek updates on regulatory approvals of the Tesla-supervised FSD in Europe, China and other countries. TSLA YTD mountain Tesla shares in 2024 Some analysts, including CFRA's Garrett Nelson, are viewing Tesla's upcoming event as more of a Hollywood-esque showcase that's driving buzz for the EV maker, which spends far less on ad spending compared to other automakers. "I've been in the bull camp for a long time regarding the Tesla story. In July, after their second quarter earnings release, I moved to a hold. So I'm more of a skeptic at this point heading into this event," Nelson told CNBC. He added that the stock's dramatic rally as of late is typical of how it has performed ahead of major Tesla events. "The bar is now very high, and it's gonna be tough for Tesla to surpass these very lofty expectations heading into this investor day," Nelson said. "They've really hit a wall. The revenue growth has hit a wall. The earnings growth is declining. And looking out two to three years, we don't see much improvement in EPS." A high-risk, high-reward venture Analysts polled by LSEG have a consensus price target of $210.71 on Tesla shares, implying a decline of 19% from Friday's close. Bernstein, UBS and Guggenheim are among the Street's most bearish leading up to the event, with the firms struggling to justify Tesla's current valuation and buy into Tesla's plan for widescale robotaxi deployment. Analysts generally believe a robotaxi service is unlikely to be available anytime soon. Bernstein rates the EV-makers shares as "underperform," with a price target of $120 -- that's a downside of nearly 54% from current levels. Not to mention, Tesla's Autopilot and supervised FSD systems are currently classified as a Level 2 autonomous-driving system that are intended for use with a fully attentive driver, with Level 5 being an entirely autonomous vehicle. "We believe full level 5 autonomy will be solved over time, and that *if* Tesla is first to launch a level 5 solution with existing hardware, it would likely have a significant cost/supply advantage over competitors." a team of Bernstein analysts led by Nikhil Devnani said in a Sept. 17 note to clients. "However, we struggle to have conviction that Tesla can leapfrog incumbents currently delivering on Level 4 today, and accordingly struggle to underwrite the company's valuation," he added. Level 4 capabilities means that a vehicle can perform a high level of driving automation, but a human driver can intervene if needed. Meanwhile, UBS analyst Joseph Spak has a sell rating on the stock and a $197 price target, implying a 24% slide from Friday's close. The "We, Robot" event is an "opportunity for Tesla to not only convince that investor base that the current valuation is justified, but that there is significant upside opportunity from here," he said in a Sept. 19 note to clients. "We believe widescale Tesla robotaxi deployment is unlikely in the coming years," Spak added. "That is not to say Tesla isn't making technological progress, but Tesla needs to show that the tech is ready and safe." That includes contending with local regulations and potentially figuring out the logistics and operations of a transportation network company, he said. Unlike Tesla, Google's self-driving Waymo car runs its robotaxi service in the "real world" as it participates in California's Autonomous Vehicle Passenger Service pilot program , Spak pointed out. Still, the bull case around Tesla's robotaxi ambitions highlights the company's potential to provide cost-effective technology. For instance, Tesla's cheaper hardware, scalable software and a large base of existing owners gives the company an advantage if CEO Elon Musk's vision of a hybrid autonomous vehicle fleet becomes successful, according to Bernstein's Devnani. Specifically, the company's plans to use a short-range camera-only sensor stack would help lower the price point to between $25,000 and $30,000 per car, implying "5-6x the supply potential for the same level of CapEx if Tesla can pull it off," he said. Devnani, added, however, that his team is "cautious on Tesla's odds of all-out winning in self-driving technology" as it has a more limited sensor stack compared to its competitors. (Uber, Waymo and Cruise use light detection and ranging, or LiDAR, technology in its self-driving cars.) Goldman Sachs analyst Mark Delaney also expects Tesla's cost structure on hardware to remain an advantage for the company, but he added that high-definition radar could be needed for a robotaxi in certain weather conditions. He rates the stock neutral and his price target of $230 suggests downside of more than 11%. Morgan Stanley analyst Adam Jonas is a Tesla bull with an overweight rating and a $310 price target -- reflecting 19% upside. However, even he seems to have some doubts as "We, Robot" approaches. "We are, frankly, struggling to see how the day can live up to investors' high expectations," Jonas said. He said that details he's looking for include data comparing the safety of Tesla's autonomous vehicle technology to human driving. A wait-and-see tech story Tesla's recent growth has been driven by its rapidly growing energy generation and storage segment, which hasn't been enough to offset the slowdown in its auto business, CFRA's Nelson noted. The company remains the top EV seller in the United States by far, but its automotive revenue in the second quarter came in at $19.9 billion, a 7% drop from a year earlier, as it's losing market share to several other rivals releasing their own EVs. For now, Nelson's not convinced that the upcoming vehicle launch will be the game-changer are hoping for -- and he thinks its a "misnomer" to call Musk's next vehicle a true "robotaxi" unless it displays real robotic capabilities. "Investors should take a wait-and-see approach here, but expectations are very high," Nelson said. "Our big issue with the with the story -- and Tesla is a 'story stock,' it's all about the next catalyst in the story -- is that Tesla's intermediate-term growth does not have a lot of transparency." Morgan Stanley's Jonas has an eye on the evolving relationship between Tesla and Musk's new artificial intelligence startup xAI. Tesla plans to build a custom supercomputer named Dojo that processes and trains AI models using video and data from Tesla cars. In turn, this would be used to improve Tesla's driver assistance features. "Tesla upside requires AI execution," Jonas said in a recent note. "Tesla's future valuation is highly dependent on its ability to develop, manufacture and commercialize autonomous technologies, ranging from transportation to humanoids."

Elon Musk is staking Tesla's very future on his Oct. 10 robotaxi unveil

When Elon Musk unveils Tesla's robotaxi concept car on Oct. 10 in Los Angeles, it will be the first new product reveal since his prototype Optimus robot two years ago. In a sign of just how grand the scale should be, he's reportedly rented out the full Warner Bros. studio lot outside Hollywood. The stakes couldn't be higher, with Wedbush Securities tech analyst Dan Ives calling the event nothing short of a "linchpin day for the Tesla story." While Musk notably tempered expectations going into the Optimus event, this time he's setting the bar high right from the get-go. "This will be one for the history books," he posted on Wednesday. The Tesla CEO has boiled his investment case down to a binary bet on whether his team can crack the code for unsupervised full self-driving (FSD) -- a technology so complex he's likened it to a baby form of artificial general intelligence. Currently his cars can already drive on their own using a sophisticated onboard computer trained on video data harvested from Teslas already on the road. But they may do the wrong thing at the worst time and require constant supervision, like a teenager with a learner's permit. Eliminating this risk would be akin to Tesla's very own ChatGPT moment, according to Musk. This breakthrough would lead to what he has called the single biggest overnight increase in asset value history has ever seen as millions of existing Teslas across the U.S. could be taught to drive unsupervised on their own at the push of download button. Once activated, they could earn $30,000 in robotaxi fares every year for their owners while they eat, sleep or work -- and that's a figure Tesla cited in April 2019, so it would be closer to $37,000 in today's dollars. That's why Musk recently had a message to any Tesla investors still skeptical about its autonomous driving ambitions -- if this isn't the stock for you, get out. "Anyone who doesn't believe that Tesla would solve vehicle autonomy [...] should sell their Tesla stock," he told shareholders in July. "If you believe Tesla will solve autonomy, you should buy Tesla stock." Musk estimates the technology is easily worth $5 trillion to investors, a sum that would make Tesla the most valuable company in the world by far. Robotaxis would also begin shifting Tesla's profits and losses from being dependent on the sale of cars to being more indicative of a software company: licensing out his FSD at high margins with predictable recurring revenue. Will McDonough, chairman and CEO of asset manager Corestone Capital, argues this kind of subscription-based turnover is just what institutional investors like himself love. "A car sale is a single moment in time," he tells Fortune. "This is monthly revenue in perpetuity, and predictive cashflows is what Wall Street wants." But Musk's ambitions go further. What better car would there be for the job of ferrying passengers back and forth than one built strictly for that purpose? It wouldn't even need a steering wheel or pedals. That's the kind of visionary concept he will likely be presenting on Oct. 10. Such a car could economically compete with an Uber without the hassle and cost of paying the driver. Just the mere mention of Musk's robotaxi ride hailing plans in April sent shares in the market leader tumbling. Brad Ferguson, president of Halter Ferguson Financial, says research by his firm has shown the rideshare market is underserved in the U.S., a gap Tesla can step into if if can narrow the 10-year lead of its competitors. He hopes the robotaxi reveal will raise awareness among customers and even companies interested in running fleets of Tesla robotaxis. "There is a significant market opportunity for a new entrant to offer rides at scale at $2 per mile or less," he tells Fortune. "People think of Uber and Lyft as for tourists, but we've found most of the ridership is local -- they use rideshares to get to and from work." One of the reasons so much is riding on the outcome of Oct. 10 is that optimism around the robotaxi event has helped build a floor in the stock, propping up a price that should in theory have tracked this year's decline in profits. Current estimates for next year's earnings only foresee a return to 2023 levels around $3.12 a share, still well below its record $4.07 record from 2022. And yet the stock is roughly flat for the year so far, trading at more than 80 times next year's consensus earnings per share. Nicholas Colas, cofounder of market analysis firm DataTrek, called it a "faith-based stock." Fortunately, the timing of the unveil is perfect. Sentiment has been improving ever since the Federal Reserve lowered rates by a half percent and signalled more was to come. High borrowing costs have limited consumers' ability to afford the high monthly payments for a car loan. Moreover, next week's quarterly vehicle sales data are expected to show the first increase over the previous year since 2023. Some notable Tesla bulls like Future Fund managing partner Gary Black have warned the event will likely be just another buy-the-rumor, sell-the-fact event if history is anything to go by. But Musk doesn't seem to think so. This might also be because the Tesla CEO has something else up his sleeve. When he delayed the unveil by two months to make an important design change, he added it would also give the team time to "show off a few other things." This could include a second Tesla Roadster. Back in February he promised to unveil it before the year was out following what he called a radical redesign of the 2017 concept car. One aspect that supports this is the fact that Tesla has no current two-seater whose sales it could cannibalize. If the company does reveal it, there would be little risk customers would cancel the purchase of an existing model in favor of waiting for the Roadster. The invite also has the words "We Robot." That might indicate Musk could also show off the latest iteration of his Optimus prototype he believes will transform Tesla into an AI and robotics company first. Tesla didn't immediately respond to a request for comment. Corestone Capital's McDonough could even imagine more news dropping, much like what investors expect at an Apple event, possibly with ties to other parts of Musk's empire. Integration of his xAI chatbot Grok in Tesla vehicles is a widely speculated rumor. There's so many possibilities given the breadth of Musk's businesses. "The ticker should be E-L-O-N, not T-S-L-A," McDonough says, "because people are trying to own Elon Inc."

What You Need To Know Ahead of Tesla's 'Robotaxi' Event Next Week

Deutsche Bank and Wedbush analysts wrote recently that they expect to see a demo of the vehicle, rumored to be called the "Cybercab," along with projections of how much the robotaxi will cost to operate, where it will be produced and be available, and what Tesla's version of a ride-sharing app could look like. The analysts also said they expect that Tesla could show a new, lower-cost vehicle that has been a company goal for years, along with other updates on its self-driving software, its Optimus humanoid robot, and more. Wedbush analysts, reiterating an "outperform" rating with a $300 price target, said they "continue to believe Tesla is the most undervalued AI name in the market," and see the robotaxi unveiling as a "seminal and historical day" in its history. Deutsche Bank analysts, who have a "buy" rating and a $295 price target, said they are optimistic headed into the event, but recognize that high expectations could lead investors to "sell the news" following the event. Overall, analysts are more divided on Tesla stock. Of the 19 analysts tracked by Visible Alpha, nine have "buy" ratings, seven have "hold," and three have "sell" ratings, with an average price target at $218.61, roughly 12% below Wednesday afternoon's level of about $248 a share. Tesla shares have recovered after a substantial selloff in the first half of the year, but fell about 4% Wednesday after its third-quarter deliveries figures failed to impress. They are essentially flat on the year.

Should You Buy Tesla Stock Before Oct. 10? | The Motley Fool

Tesla's highly anticipated Robotaxi event is two weeks away, and the stakes couldn't be higher. Oct. 10 might be the most important day in Tesla's (TSLA 2.46%) history. In two weeks, investors are going to get a front-row seat to the future of Elon Musk's electric vehicle (EV) empire. The stakes are high, and the margin for error is virtually nonexistent. Let's dive into what makes this such a pivotal moment for Tesla. A lot of car manufacturers are interested in developing autonomous vehicles. Tesla has spent years building an autonomous driving platform dubbed Full Self-Driving (FSD), and on Oct. 10, the world may get a preview of how this technology will shape the company's future. Tesla is referring to the high-profile event as "We, Robot." Musk has used the names "Robotaxi" and "Cybertaxi" for the company's autonomous driving platform. OK, so why is this event so important? For starters, it was originally scheduled for August. Now that the event has been delayed by three months, expectations are even higher. But the bigger reason the Robotaxi event is a pivotal juncture in Tesla's history is that investors may finally get a detailed look at the company's artificial intelligence (AI) progress. In a way, investors could think of self-driving cars as giant computers controlled by AI and robotics technology. FSD and Robotaxi are widely considered the major growth catalysts that could spur renewed interest in Tesla's EVs and enable the company to enter and disrupt new markets, including ride-hailing, car rental, and delivery services. If the Robotaxi event is underwhelming or a unforeseen glitch occurs, you can be sure that the bears will come out of their caves and relentlessly question Tesla's capital expenditure (capex) and research and development (R&D) investments. Let's take a trip down memory lane. Back in 2019, something unexpected happened when Tesla unveiled its Cybertruck SUV. During the demo, Tesla's head designer, Franz von Holzhausen, threw a ball at the truck's "armor glass" windows. The windows broke. That wasn't supposed to happen. Embarrassing? Yes. Detrimental? No. Although the initial setbacks with the Cybertruck inspired some reputational damages and delayed releases for Tesla, the wait appears to have been worth it. Despite being new to the market, the Cybertruck is outselling EV pickup trucks from Ford, Rivian, and many others. A hiccup with the Robotaxi event won't spell the end of Tesla. However, I see the Cybertruck mishap and the Robotaxi unveiling as very different. Despite the hype, Tesla's future doesn't hang on the Cybertruck. In a world where the SUV was scrapped and never released, Tesla would still be a manufacturer of high-quality EVs. On the other hand, Musk himself has referred to Tesla as a robotics business. If the company fails to pull off the Robotaxi at scale, the long-term growth narrative surrounding Tesla has more than a couple of cracks in it. This leads me to another important detail. Tesla stock has soared 22% during the month of September (as of market close Sept. 25). I think momentum traders have arrived and are trying to take advantage of volatility trends as the Robotaxi event nears. Following day traders into momentum plays is usually a bad idea. As an investor in Tesla stock myself, I encourage others to sit on the sidelines for now. The prudent strategy is to tune into the Robotaxi event and see what Musk and the team really show off. The momentum following the event will eventually subside, and investors will have ample opportunities to scoop up shares of Tesla at more reasonable valuations once the company proves its AI ambitions are bearing fruit.