They’re not convinced.
Cost Benefit
As Elon Musk’s Tesla triples down on an autonomous ridehailing service, analysts are ringing the alarm bells, warning that even if the technology were swiftly perfected, it could take many years for robotaxis to become profitable.
As Business Insider reports, analysts at HSBC warn that the market for driverless taxis — if there even is one — is being “widely overestimated.”
In a note published on Monday, they posited that driverless cabs involve a whole host of “overlooked” costs that could severely cut into already razor-thin margins, including parking, charging, cleaning fees, and human remote operators, who are tasked with taking over when needed.
“When we factor in these costs, we believe robotaxis won’t be break-even on a cash flow basis until 7-8 years after launch,” the note reads, as quoted by BI.
It’s a notable vote of no confidence, undercutting Musk’s promises of establishing a fleet of “millions” of autonomous Teslas by the end of next year, efforts that would allegedly add tens of trillions of dollars to Tesla’s market cap.
Exaggeration Station
Even without factoring in additional costs, Musk’s EV maker has struggled to realize self-driving. The mercurial CEO has infamously promised that Teslas will drive themselves “next year” — every year since 2014.
The only real competitor in the robotaxi space, Alphabet’s Waymo, has also fallen far short of turning its autonomous ride-hailing service into a profitable business, bleeding billions of dollars each year.
HSBC analysts warned that regulatory hurdles and necessary hardware upgrades could pose major challenges in scaling up robotaxi services, meaning that it could take Tesla a full eight years to turn a profit — and that’s if the stars align on Musk’s outsize promises.
Promises made in the past could be an issue as well: Musk has previously admitted that vehicles built before 2023 will need a full onboard computer swap to enable actual self-driving.
As sales continue to crater in the US, Europe, and China, nobody knows how much time Musk’s EV maker still has. While investors are still happy to prop up a near $1 trillion valuation, Musk’s embrace of far-right extremism has left a massive hole in the company’s finances.
In other words, Tesla is facing an enormous uphill battle in its attempt to catch up with Waymo and prove that there’s ultimately a payoff for dominating the robotaxi space.
More on robotaxis: Tesla Is in Serious Trouble in China
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