Analysis-Tesla doubles down on robotaxi timeline; investors enthused - and skeptical

By Chris Kirkham

(Reuters) -Tesla peppered its latest earnings call with pledges to launch commercial robotaxi operations soon, with CEO Elon Musk promising that autonomous vehicles will "move the financial needle in a significant way" by late next year.

While the U.S. electric vehicle maker has missed targets many times before, its reiteration on Tuesday of a previously announced launch target has investors believing that its self-driving future is close.

As its core automotive business struggles, with vehicle sales down 13% in the first quarter, expectations are high for Tesla to prove it can overcome the technological hurdles of autonomous driving and demonstrate a sound business model for driverless car services.

Most bullish investors and analysts tie the bulk of Tesla's stock value to its plans for a massive robotaxi and autonomous-driving subscription business.

Now is the time for "the fundamental inflection" that "we're all hoping for," said Blake Anderson, associate portfolio manager at Carson Group, a Tesla investor.

Tesla stuck to its previously announced June timeline for launching a paid robotaxi service in Austin, Texas, providing investors confidence that Musk's time spent as a government cost-cutting adviser to President Donald Trump had not caused delays.

On Tuesday's call, Musk said Tesla will first use existing Model Y vehicles outfitted with self-driving software. The automaker is also developing a dedicated autonomous model, dubbed the Cybercab, with production starting next year.

Musk said he expects autonomous driving technology will begin to "affect the bottom line of the company, and start to be fundamental" by the second half of 2026. 

"I predict that there will be millions of Teslas operating fully autonomously in the second half of next year," he said.

Musk made a similar prediction six years ago, in 2019, saying "next year, for sure, we'll have over one million robotaxis on the road."

Still, Brian Mulberry, client portfolio manager at Tesla investor Zacks Investment Management, said he felt "this is happening, this is coming soon. They have the miles, the safety record and the technology they need."

Investors and analysts in the next few months will be looking for concrete signs that Tesla can scale the robotaxi business and navigate technical challenges.

Anderson said in the coming months he wants to see specifics such as how much Tesla will charge per mile in Austin, and whether that can be profitable. He also wants more detail on Tesla's safety record and how frequently its vehicles in Austin have to disengage from autonomous driving mode.

"Safety is the thing they control the most, so I want proof that what they do control is ironed out," Anderson said. "Then I have a much greater line of sight into the national rollout."

Others are less convinced on Musk's timeline that robotaxis will play a material role in earnings by the second half of next year. Musk on Tuesday's call said the Austin robotaxi launch would start with 10 or 20 Model Y vehicles, and that Tesla would "scale it up rapidly after that," expanding to other U.S. markets later in the year.

During earnings calls in January and October, Musk said he expected to launch robotaxis in California by the end of this year. He did not mention California during Tuesday's call.

Tesla this year received a preliminary permit in California but needs several more permits from state agencies before it can launch a paid robotaxi service.

Seth Goldstein, equity strategist at Morningstar, said Musk's timeline of profitability next year sounded like "a very quick pace" for a technology that has taken competitors such as Alphabet's Waymo nearly a decade to work out.

Musk said on Tuesday's call that Tesla's current self-driving technology, being tested in Austin, would require driving 10,000 miles on average "before you get in an accident or an intervention." He did not elaborate on how he arrived at that number, and Tesla as of last year had not submitted data on interventions to regulators in California like other autonomous vehicle companies such as Waymo and Amazon's Zoox. 

Goldstein still said he believes Tesla can fine-tune its testing by the end of next year and launch a wider robotaxi system that can compete with Waymo by 2028.

But he said he expects investors will be disappointed if Musk's predictions of revenue and profit generation by next year do not materialize.

"Now that they've guided to an actual timeline for revenue, that's a point they'll be held to," Goldstein said.

(Reporting by Chris Kirkham in Los Angeles; Editing by Christopher Cushing)