Tesla’s Q1 Struggles Offset by Ambitious Robotaxi Plans
Tesla (NASDAQ: TSLA) reported disappointing financial results for the first quarter. Every significant metric—deliveries, revenue, operating margin, and earnings—saw a decline as the company lost market share in China, Europe, and the United States.
Despite the downturn, CEO Elon Musk provided a glimmer of hope during the earnings call. Tesla is set to launch its first robotaxi service in Austin, Texas, by June. Musk expressed optimism, predicting the company could eventually capture “99% market share or something ridiculous.”
The Future of Autonomous Ride-Sharing: A Trillion-Dollar Market
Autonomous driving technology could transform mobility by substituting human drivers with AI, enhancing safety while lowering costs. According to Straits Research, the ride-sharing market is expected to surpass $820 billion by 2033. Some industry experts postulate that cost efficiencies from robotaxis may lead to an even larger market, increasing participation rates.
For example, Morgan Stanley projects that if autonomous services charge by the mile, a reachable market of over $1 trillion per year exists solely in the U.S. Additionally, Uber CEO Dara Khosrowshahi highlighted that the U.S. market presents a trillion-dollar opportunity. Ark Invest estimates the global robotaxi market could reach $11 trillion by 2030.
Tesla vs. Waymo: Competing for Robotaxi Dominance
Alphabet‘s Waymo currently leads the market in autonomous ride-sharing. It began commercial robotaxi services in Phoenix in 2020 and has expanded into San Francisco, Los Angeles, and Austin, with plans to enter Atlanta, Miami, and Washington, D.C., in the coming years. Waymo currently facilitates 250,000 rides weekly in the U.S.
Tesla, on the other hand, is preparing to roll out its first autonomous ride-sharing service in Austin this June, with additional U.S. cities to follow. Although Waymo has a notable head start, Musk believes Tesla will ultimately dominate the robotaxi market. His confidence stems from the extensive data collected by millions of Tesla vehicles on the road, which he argues gives Tesla a significant edge.
“The more training data you have, the better the results,” Musk stated during the 2023 earnings call. He emphasized that Tesla has more vehicles gathering data than all other companies combined, potentially allowing for better AI model development for its autonomous driving software.
In contrast, Waymo’s robotaxis use multiple sensors—including cameras, radar, lidar, and audio receivers—leading to higher costs and scalability challenges. According to Waymo CEO Dmitri Dolgov, the equipment on their fifth-generation robotaxis costs as much as $100,000. Furthermore, lidar necessitates precise mapping of each city, complicating rapid deployment.
Tesla asserts that its Cybercab, a purpose-built robotaxi, will cost under $30,000, thanks to its full self-driving (FSD) platform relying mainly on cameras and computer vision. This method is seen as more scalable; once FSD is optimized, Tesla could push updates to cars in any city and quickly initiate robotaxi services. This potential efficiency explains Musk’s belief in Tesla’s market dominance.
However, investors should remain cautious. Tesla has a history of overpromising and underdelivering. In 2019, Musk forecasted a million robotaxis on the road by 2020. Five years later, the company has yet to deploy a single driverless taxi, but Musk insists that full autonomous rides are imminent in Austin by June.
Investment Opportunities: What to Consider
Many investors often feel they may have missed opportunities with top-performing stocks. It’s crucial to note that market changes can create new chances for growth. Recent trends, for example, indicate numerous companies nearing valuable advancements.
- Nvidia:If you’d invested $1,000 in 2009, you’d see returns of approximately $287,877.
- Apple:A $1,000 investment in 2008 could yield around $39,678.
- Netflix:If you invested $1,000 in 2004, your investment could have grown to approximately $594,046.
Investors should continuously evaluate emerging opportunities, especially in segments like autonomous driving.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Trevor Jennewine has positions in Tesla. The Motley Fool has positions in and recommends Alphabet, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
