Safe, Routine, Ready: Does That Spell the End for Tesla's Run-Up?
Key Points
Waymo has long posted steady and safe driving records although with slower expansion rates.
Now Waymo is gearing up to rapidly enter five new cities in the U.S. market.
Tesla hopes to remove its safety monitor and go full driverless by year-end.
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Tesla (NASDAQ: TSLA) shares have been on a wild ride in 2025 with investors engaged in a tug of war of sorts, between bears and bulls. The bears base their position in reality, a reality where Tesla sales and profits are in decline and its vehicle lineup is aging. The bulls base their position in a potentially lucrative future based around artificial intelligence (AI), robotics, and robotaxis. Right now, the bulls are winning with Tesla stock up 28% over the past three months, but here's why investors might want to pump the brakes a bit.
Coming to a city near you
"Safe, routine, ready: Autonomous driving in new cities" are the words that should have Tesla investors pumping the brakes on the potentially lucrative future they envisioned for the electric vehicle (EV) maker. That's because direct competitor Waymo is shifting its expansion into a higher gear: "We've built a generalizable Driver, powered by Waymo's demonstrably safe AI, and an operational playbook to reliably achieve this milestone," said Tekedra Mawakana, Waymo's co-CEO, on the expansion, according to Electrek.
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This week, Waymo announced fully autonomous driving in five new cities: Miami, Dallas, Houston, San Antonio, and Orlando. Operations started in Miami this week and will begin in the remaining four cities in the coming weeks, although it's important to note that doors for riders won't open until next year. This goes with Waymo's recent playbook to test for a few months before opening the app to the public.
Playing catch up
It's also important for investors to grasp the lead that Waymo may have developed over the past few years. For instance, Tesla is currently testing its initial robotaxi operations in Austin, Texas, with roughly 30 robotaxis in operation and plans to expand the fleet to about 500 by the end of the year. Tesla is still using a safety monitor, which Waymo removed in 2020, but has plans to transition to fully driverless operation by the end of the year.
Tesla Cybercab. Image source: Tesla.
The five new cities that Waymo is entering will bring its total city count to 10 at a time when Tesla just announced it obtained a permit to operate a ride-hailing service in Arizona. It's definitely a step forward for Tesla, although additional permits will be required before the automaker can operate a full robotaxi service in the state. When Tesla enters the Phoenix, Arizona market next year, it will already trail Waymo's operations in the city, which boasts at least 400 autonomous vehicles. In fact, Waymo said it has already surpassed 10 million driverless trips served to riders across its U.S. operations.
Despite Tesla playing catch up to rival Waymo, Tesla investors have some reason to be optimistic. Tesla could very well develop a competitive advantage in scaling a robotaxi business thanks to access to a plethora of Tesla vehicles on the road and its production capacity. Furthermore, Tesla's strategic rollout could be more scalable as the company is relying on a camera-based system rather than LiDAR and radar, which competitors are using.
What it all means
Tesla shareholders also made it clear where they want CEO Elon Musk's focus. Musk's new compensation package, worth up to $1 trillion, was approved by 75% of voters but with milestones tied to future endeavors. Musk will still have to build cars for some of his rewards, have 1 million robotaxis in commercial operation, 1 million Optimus robots, and 10 million Full Self-Driving subscriptions. These goals suggest the company is pivoting its core business from automotive manufacturer to a more tech-centric company.
Tesla's best days may very well be ahead of it. It's already proven many naysayers wrong by making it this far, but it's important for investors to pump the brakes on robotaxi hype, because not only is Tesla playing catch up to Waymo; the future of robotaxis is more uncertain thanks to evolving regulations, lawsuits, and safety concerns. Investors need to understand what company they're investing in moving forward, given Tesla's lofty valuation and price-to-earnings (P/E) ratio approaching 300 times, and a market capitalization more than 10 times Ford and GM combined.
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Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.
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