Tesla’s Robotaxi Launches with a Whimper: Only 10 Cars on the First Day! A Golden Era or Losing Out to Waymo?

TradingKey - On Sunday, June 22, Tesla officially launched its autonomous taxi service, Robotaxi, in Austin, Texas. Compared to Elon Musk’s ambitious plans for autonomous taxis over the years, the commercial rollout of Robotaxi seems underwhelming.

Musk announced the official launch of Robotaxi on social media platform X, calling it the culmination of ten years of hard work. However, on its first day, Tesla deployed only about 10 Robotaxis, available exclusively to invited users. This group consists mainly of selected Tesla enthusiasts, investors, and social media influencers, and their travel range is limited. Musk noted that during the testing phase, each ride would cost $4.20.

Additionally, contrary to earlier promises of full autonomy, Tesla opted to have a safety driver or company employee in the front passenger seat during the initial operations.

Divergent Opinions: A $2 Trillion Market Cap or No Match for Waymo?

Daniel Ives, an analyst at Wedbush long bullish on Tesla, claims that services like Robotaxi will herald Tesla’s autonomous driving "golden age," potentially propelling its market cap to as high as $2 trillion. Ives believes that Tesla's journey toward this valuation will unfold over the next 12 to 18 months.

Conversely, Barclays analyst Dan Levy offers a counterpoint, warning that Tesla still faces significant challenges in building the infrastructure for autonomous vehicles and that catching up with Waymo is no easy task.

Reports indicate that before launching commercial services, Waymo underwent a year-long testing period, which included six months of tests without safety drivers. Currently, Waymo offers driverless autonomous taxi services in cities like San Francisco, a stark contrast to Robotaxi.

Another Barrier to Expansion: Regulatory Hurdles

Tesla plans to eventually expand its Robotaxi fleet to other cities, allowing Tesla owners to add their vehicles to a fleet similar to Uber. Starting next year, they also aim to produce Cybercabs without steering wheels or pedals. However, an impending regulatory shift may hinder the expansion of the Robotaxi network.

Recently, Texas Democratic lawmakers urged Tesla to delay its autonomous taxi service until September, when new related laws are set to take effect. Signed into law by Republican Governor Greg Abbott last Friday, the regulation requires operators of autonomous vehicles to obtain a state license. This indicates bipartisan agreement on the cautious development of the autonomous driving industry.

Under the new legislation, operators must secure approval from the Texas Department of Motor Vehicles to operate driverless cars on public roads. The state government will have the authority to revoke licenses from operators they deem a threat to public safety.

Currently, Robotaxi uses Tesla's Full Self-Driving (FSD) software, which relies on a camera-based sensor system driven by artificial intelligence without the use of additional sensors like lidar and radar. Experts argue that under certain weather conditions, driving safety may not be ensured.