Tesla ( TSLA 2.27%) CEO Elon Musk has spent several years building anticipation around the company’s robotaxi initiative, culminating in the debut of these autonomous electric cars in Austin, Texas, this June.
Musk claimed that a robotaxi network would elevate Tesla to the world’s most valuable company, envisioning swarms of self-driving Teslas gradually dominating the global market. At a high-profile event last October, he introduced the self-driving "Cybercab" and outlined a plan where Tesla owners could earn money by lending their vehicles out for autonomous ridesharing while not in use. Supporters such as Ark Invest’s Cathie Wood have stated that robotaxis could push Tesla’s valuation to $5 trillion.
Yet, after Tesla rolled out a modest robotaxi service in Austin—expanding from 10 vehicles in June to 30 by late August—Musk has been noticeably less vocal about this venture.
Earlier this month, he made a comment hinting at a shift in focus toward Tesla’s next breakthrough, suggesting that the robotaxi buzz may now be fading. On his social platform X, Musk wrote, “80% of Tesla’s value will be Optimus,” referring to the company’s still-in-development autonomous robot.
The timeline for this vision remains unclear, but Musk’s post indicates he expects Optimus to eventually surpass both Tesla’s main electric vehicle division and its nascent robotaxi business in value.
Image source: Tesla.
Promises, promises
Even Tesla’s most loyal supporters now recognize that Musk’s pronouncements should be met with skepticism. It’s difficult to tell whether his statement about Optimus is the result of genuine projections or simply his trademark optimism about new technologies.
While Musk’s critics may find it exasperating, he is skilled at diverting attention from current company challenges by spotlighting bold visions for the future. The case for investing in Tesla also seems to shift frequently. Earlier this year, Musk’s collaboration with President Donald Trump sent the stock soaring, only for it to retreat following backlash over Musk’s soured relationship with Trump.
In the past week, Tesla’s stock price has rebounded despite reports indicating that its share of the U.S. electric vehicle market has dipped to 38%—the lowest since 2017—suggesting it is ceding ground in a market it helped pioneer.
Musk’s ambitious promises in robotics and his recent $1 billion stock purchase appear to have reassured investors for now, fueling the latest rally. Tesla has also received approval to test its robotaxis in Nevada.
What's next for Tesla's robotaxis
During Tesla’s July earnings call, Musk promoted the robotaxi rollout and mentioned ongoing efforts to get regulatory approval in regions like the Bay Area, Arizona, Florida, and Nevada.
He also anticipated that autonomous ride-hailing would be available to half of Americans by year-end. But with September now upon us, this goal seems increasingly unlikely.
The robotaxi service launched in the Bay Area on September 4, though each ride still requires a safety driver, meaning full autonomy hasn’t yet been achieved. Tesla is still waiting for authorization to operate driverless vehicles.
The potential market for robotaxis is enormous, but Tesla faces stiff competition. Alphabet’s Waymo is still at the forefront, and other major players are entering the field, with Amazon’s Zoox recently launching in Las Vegas.
It’s still too early to determine the true effect of the robotaxi, but chances are it will take longer than Musk predicts to have a significant financial impact. Meanwhile, lofty statements about Optimus may give the stock a temporary lift, but ultimately may not serve investors well.
At present, Tesla’s shares trade at a price-to-earnings multiple near 200, and analysts are forecasting declines in both revenue and profit this year.
Musk may have more ambitious forecasts in store, but eventually, Tesla will need to deliver measurable results. Given the current valuation and outlook, the risk and potential reward of investing in Tesla shares seem out of balance.
