Tesla unveiled its first robotaxi models, the sedan-like Cybercab and the larger Robovan, on Thursday night, but the reveal did little to boost investor confidence. This has benefitted rideshare companies like Uber and Lyft, with Lyft shares rising over 9% and Uber shares increasing by 8% on Friday, following Elon Musk’s announcement. Meanwhile, Tesla’s stock dropped more than 7%.
Musk first teased the concept of robotaxis in 2019, claiming there would be over a million on the roads by 2020. However, the much-anticipated reveal of the Cybercab lacked detailed plans to support its bold promises, including a price point under $30,000.
Wells Fargo analyst Colin Langan noted that the presentation was short on critical details and the demonstrations were conducted in a controlled environment that didn’t showcase the vehicle’s true driving capabilities. Musk indicated that his goal is to have robotaxis operational by 2027 but acknowledged his track record of being overly optimistic about timelines. Tesla has not commented on these developments.
Tesla’s autonomous driving initiative poses a challenge to rideshare companies, which have maintained a strong presence in the U.S. market. A robotaxi could lower operational costs significantly compared to traditional rideshare models.
Uber has invested in its own autonomous rideshare endeavors, forming partnerships with companies like Waymo and General Motors’s Cruise LLC. Despite this, CEO Dara Khosrowshahi recently cautioned that profitability in its autonomous services could take years, exposing it to competition like Tesla.
Analyst John Colantuoni of Jefferies stated that the outcome of Tesla’s event may favor Uber, as it gives them a momentary advantage.
The competitive dynamics in the rideshare market will largely depend on the economics behind operating autonomous vehicles. Major investments from companies like General Motors in robotaxi projects are occurring amid concerns about long-term sustainability.
According to Wells Fargo analyst Ken Gawrelski, Waymo’s high deployment costs—around $200,000 per vehicle due to its LiDAR technology—have hindered competitiveness against traditional rideshare services. He noted that Waymo does not present the same immediate risks that Tesla does because its vehicles remain prohibitively expensive to produce.
Although Tesla’s presentation did not alleviate all concerns for investors in Uber and Lyft, they will remain vigilant to see if Tesla can deliver on its promise of a $30,000 robotaxi. The market will take Tesla’s ambitions more seriously if the company progresses toward acquiring a third-party insurance provider, akin to services offered by Waymo and Uber and Lyft.
While Musk plans to roll out self-driving cars in California and Texas next year, Gawrelski cautioned that until tangible evidence of these launches is presented, Tesla’s potential to disrupt the rideshare industry will remain uncertain.