Tonight, Elon Musk is set to unveil the upcoming innovations of Tesla.
For the past decade, the head honcho of the electric vehicle manufacturing company has declared that we're on the brink of seeing authentic self-driving cars from Tesla. The upcoming promises will unfurl during an event hosted by Tesla at the Warner Bros. Studios facility in California, where they'll unveil their plans for self-driving "robotaxis."
According to Dan Ives, an analyst at Wedbush Securities and a staunch supporter of Tesla, "I consider it to be one of the most important events that Tesla has ever organized. In my opinion, it will be remembered as the iPhone launch moment for Apple, approximately five to ten years from now."
Potential Announcements
Tesla's self-driving "robotaxis" would cater to passengers without a human driver inside the vehicle. These autonomous cars will compete with existing services like Uber and Lyft. Tesla additionally plans to conduct trials involving autonomous vehicles from Waymo and Cruise (a General Motors subsidiary).
Thursday's event may also involve the unveiling of a special vehicle model specifically designed for the robotaxi fleet, which Musk has referred to as the "Cybercab."
Detailed information about Tesla's ride-sharing service is expected, which would involve utilizing both Tesla-owned and Tesla-rented vehicles from individuals who wish to lease their cars for rides when they're not in use (similar to Airbnb). Tesla would collect a percentage of the revenue, while the remaining income would go to the vehicle's owner.
Past Promises and Regulatory Challenges
Tesla has been making similar promises about autonomous vehicle capabilities and timelines for the past five years but has yet to fulfill them. Even if the technology is advanced, securing regulatory approval to operate these vehicles could be complex. Accidents involving autonomous vehicles might result in temporary or even permanent suspensions, a risk that traditional ride-sharing services don't face.
For instance, GM's Cruise unit experienced a suspension of their driving permit from the California Department of Motor Vehicles after a pedestrian was struck by a driverless car, only to be dragged beneath the vehicle for 20 feet, leading to severe injuries.
Cutbacks on Previous Promises
Musk and his supporters believe that these developments will revolutionize transportation economics. Their optimism about autonomous cars has significantly influenced Tesla's stock price for years. They forecast that Tesla could earn more from ride-sharing than car sales, as well as increase demand by customers who recoup their investment through renting their cars for rides.
However, Tesla has repeatedly failed to meet these promises. Beyond the technical considerations, regulatory obstacles remain to be addressed.
Currently, Tesla offers an optional Full Self-Driving (FSD) feature on its vehicles, priced at $8,000. Despite the misleading name, Tesla advises drivers to remain vigilant and prepared to assume control when the technology requires it, even in FSD mode.
During a call with investors in July, Musk claimed, "Unsupervised (driving) is probable by the end of this year," before conceding that his predictions have tended to be overly enthusiastic in the past.
If you listen to Musk's statements from the past, Tesla has claimed to be 'just months away' from full self-driving capabilities for several years now. During a call with investors in July 2023, Musk admitted, "I've been incorrect in my predictions about this in the past."
While independent testing has shown that Tesla's FSD has improved safety over human drivers, it has also consistently revealed flaws, such as the need for drivers to intervene every 13 miles, according to one testing service (AMCI Testing). Outsiders have found the vehicles prone to crashing if human intervention isn't timely.
"You'd experience approximately three accidents every hour. That's thousands of times worse than competing technology," criticized Gordon Johnson, a long-term critic of Tesla and Musk. He anticipates that Thursday's Robotaxi rollout will "disappoint investors."
Even those optimistic about Tesla's potential to meet its promises believe that the service is at least three to five years away.
"We're looking at disengagements at 3% of miles driven. While 97% of the way there may seem close, it's not even close. To attain the 99% threshold, and then consider the regulators' desired level of accuracy, that's an arduous process," explained Gene Munster, managing partner at Deepwater Asset Management. "It will take approximately two years to perfect the technology, followed by two to three more years to secure the necessary regulatory approval."
While Munster remains optimistic about Tesla's future success, he expects Thursday's unveiling may leave investors underwhelmed.
"They've been talking about it for years. The primary question remains about the timeline. If it's more than three months away, then investors will take it with a grain of salt," he said.
Also, even a robust figure like Ives underlines the importance of Musk overcoming the prevailing doubts, considering his past declarations.
"This is a pivotal juncture for Musk and Tesla," he stated. "Either you depart from the occasion with your jaw dropped in awe, or you leave with a nonchalant shoulder shrug."
Tesla's entrance into the ride-sharing sector with their autonomous "robotaxis" could potentially disrupt the business models of existing companies like Uber and Lyft. The company plans to introduce a special vehicle model, the "Cybercab," for this purpose.
In light of past promises and regulatory challenges, securing approval for the operation of Tesla's self-driving cars could be complex and may require addressing potential accidents involving autonomous vehicles.
