Cathie Wood Doubts Tesla’s Robotaxi Future Amid New Competitors

Investors pay attention when Cathie Wood speaks about Tesla (NASDAQ: TSLA). As the founder of Ark Invest, she has been a significant supporter of Tesla, helping to elevate the ARK Innovation ETF to prominence. Wood’s optimism for Tesla remains strong.

Tesla’s Robotaxi Potential

Wood claims that Tesla’s upcoming Robotaxi service, featuring autonomous vehicles for ride-hailing, could significantly enhance the company’s valuation. In a recent interview on Bloomberg TV, she projected the stock could rise to $2,600 within five years, more than seven times its current value.

Competition from Waymo

Tesla once led the battery electric vehicle market, but it now faces stiff competition in autonomous driving. Waymo, a subsidiary of Alphabet (Google), has been a frontrunner, having offered paid driverless rides since March 2022. Waymo currently provides over 250,000 paid rides weekly, a fivefold increase from last year. Tesla’s CEO, Elon Musk, confirmed the company’s Robotaxi service aims to launch by June with about 10 vehicles in Austin, Texas.

Challenges Facing Robotaxi Expansion

However, establishing a robust Robotaxi service may be challenging. Ashok Elluswamy, Tesla’s head of self-driving, acknowledged that Waymo is likely two years ahead in terms of technology. While Tesla has only achieved level 2 autonomy, requiring human supervision, Waymo operates at level 4, allowing for fully autonomous rides.

Expanding Robotaxi may be hindered by regulatory issues and potential liabilities from accidents. Waymo’s prudent growth strategy could serve as a template for Tesla.

Financial Viability Concerns

Reaching Wood’s price target of $2,600 seems unlikely without rapid expansion of the Robotaxi service. Alphabet doesn’t disclose specific financials for Waymo, which is categorized under “Other Bets.” In Q1 2025, this segment generated $450 million but incurred a $1.2 billion operating loss.

Thus, Tesla not only needs to scale its Robotaxi service to 250,000 rides to compete with Waymo, but must also operate at a larger scale to achieve profitability. Wood’s projection hinges on Robotaxi generating 63% of Tesla’s revenue, making its success vital to her forecasts.

While Tesla’s achievements under Elon Musk cannot be underestimated, lofty returns over the next five years may seem unlikely without clear evidence of Robotaxi’s success. Although Tesla may eventually reach $2,600, it will likely take longer than five years.

The views expressed in this article do not necessarily reflect those of Nasdaq, Inc.