Tesla reports earnings on Tuesday, and analysts will be listening closely for updates on its robotaxi ambitions – a key pillar of the company’s (still) sky-high valuation.
The bull case, says Morningstar, is that self-driving software will become increasingly profitable as it improves, paving the way for a robotaxi service, wider use among Tesla owners and potential licensing deals with other carmakers.
The bear case: Tesla’s heavy spending on autonomous driving will be value-destructive, with robotaxis delayed and struggling to compete with established players such as Google’s Waymo.
A report from technology-focused publication, The Information, casts doubt on the bullish narrative, claiming Elon Musk scrapped the long-promised $25,000 Model 2 in favour of the robotaxi, despite internal analysis warning the latter might never be profitable.
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Sceptics at Tesla believed robotaxis would be limited to the US for years due to international regulatory challenges. Additionally, they believed emerging markets would likely prefer affordable EVs over robotaxis.
Musk ignored this advice, focusing on the robotaxi over cheap EVs.
He has convinced many that Tesla should be valued as an AI and robotics stock, not an EV maker. Given the apparent scepticism inside Tesla, it may be time for analysts to press Musk on his lofty promises.
