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Although autonomous transportation is nothing new for Tesla, it hasn't yet materialized in the robot taxi business. On InvestingFox, we only recently analyzed Uber and its cooperation with manufacturers of such vehicles. Waymo, which belongs to Google's parent company Alphabet, the owner of Google, is also certainly worth mentioning. The services of autonomous taxis are also operated by the carmaker General Motors or China's Baidu. However, this technology is still in its early stages and the services offered can only be used on a limited scale.
Cybercab is finally here
The long-awaited robotic taxi, which CEO Elon Musk unveiled at the "We, Robot" event on October 10, 2024, is expected to sell for less than $30,000. The inductive-charging car will be able to carry two passengers and will cost about $0.20 per mile to operate. In addition to the Cybercab, a 20-seat Robovan and a revamped version of the humanoid robot Optimus were unveiled. Musk estimates the start of Cybercab production in 2026. This ambitious timeline depends on mastering the challenges, especially in terms of safety and getting permits, given that Cybercab as well as Robovan, will use only AI and cameras. Which is a challenging and especially different mechanism compared to competitors' robotic taxis. Musk also hinted that Tesla could start introducing fully autonomous driving in the Model 3 and Y as early as 2025, highlighting the safety benefits of such driving, which will be several times safer than driving with human drivers.
Lack of information also affected the shares
However, analysts and investors who attended the event left slightly disappointed as Elon Musk failed to offer more important details such as a plan to overcome the challenges of fully autonomous driving or production speed and were given more of a marketing presentation. This also affected the price of shares, which were down 6% in pre-market trading on Friday, October 11, 2024, and later extended the loss to nearly 9% during trading hours to close at $217.80.* While the Cybercab is a step forward, the market would probably rather appreciate the unveiling of a vehicle that is cheaper than current models.
Source: Investing.com*
Tesla is primarily an AI company
When the phrase "AI company" comes up, we often think of companies like NVIDIA, AMD or other giants like Apple, Microsoft and Alphabet. Rather, the name Tesla has always been associated with electric cars with long driving range and advanced technologies in their equipment, the most impressive of which is autonomous driving. However, this can only be achieved through continuous machine learning and the development of complex artificial intelligence models capable of mimicking human perception while driving, even surpassing it. This means that Tesla is putting considerable effort and resources into AI and can use the new knowledge in products that are not electric cars. For example, the aforementioned Optimus autonomous robots, suggesting its entry into other sectors. Musk even referred to them as the greatest product of all time during the event. Therefore, the possibility that in the future it could be seen more as a developer of automated technologies comes into play.
Tariffs on electric cars are a risk for Tesla
For consumers and investors, however, Tesla is still primarily an electric car maker, which is what its financial performance stands and falls on. In addition to the global decline in demand for all-electric vehicles, it also faces potential problems related to import tariffs against China. The European Union has joined the US and Canada with sanctions of its own, with tariffs set to rise until 31 October 2024. The risk is not only the threat of reciprocal measures, which could make it more difficult to export electric cars or other products to this important market, but for Tesla it could also mean curtailing exports from Chinese factories to Europe. While the highest import tariffs of 35.3% on electric cars from China apply mainly to manufacturers there, foreign companies operating there will also be affected, with Tesla vehicles carrying a tariff of 7.8%. This is on top of the EU's existing 10% compulsory tariffs on all car imports.
Preliminary indicators point to a successful third quarter
Despite the sales declines, Tesla did well according to their latest third quarter report, producing nearly 470 thousand vehicles with deliveries of nearly 463 thousand, with Model 3 and Model Y being the best sellers. The company did particularly well in China in September, where it sold 66% more cars than in the same month last year, while overall sales of its EVs sourced from Chinese factories increased by 19.2%. Full financial results for the third quarter of 2024 are expected to be released on 23 October. Despite these preliminary positive numbers, Tesla, like other automakers, is facing increasing competition. Its value is also largely linked to Elon Musk's public appearances and actions, increasingly involved in politics. This may influence target consumers who also take into account their moral or ideological integrity when making purchases.
Conclusion
The implementation of artificial intelligence is still uncertain in some industries, and so concerns about companies over-investing in this revolutionary technology are often prevalent. In Tesla's case, however, the unveiling of Cybercab and other products reflects its ambition and growth potential in AI and autonomous technologies. Furthermore, the success of these innovations could position Tesla not only as a manufacturer of electric vehicles, but also as a pioneer in automated solutions. As the company faces multiple challenges, the ability to leverage AI technology could bring the expected wind in its sails and prove crucial in maintaining its market position.
David Matulay, analyst of InvestingFox
* Past performance data is not a guarantee of future results.
Warning! This marketing material is not and should not be construed as investment advice. Past performance is no guarantee of future results. Investing in foreign currency may affect returns due to fluctuations. All securities transactions may result in both gains and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future results. InvestingFox is a trademark of the company CAPITAL MARKETS, o.c.p., a.s. regulated by the National Bank of Slovakia.
Sources:
https://ir.tesla.com/press-release/tesla-third-quarter-2024-production-deliveries-and-deployments
