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The Cybercab has failed to capture my attention

Tesla CEO Elon Musk recently unveiled the long-awaited robotaxi, the Cybercab, during an event titled "We, Robot" at Warner Bros Studios in Burbank, California. The Cybercab is a two-door self-driving vehicle featuring wing-like butterfly doors and notably lacks pedals or a steering wheel. Musk detailed how the Cybercab is crucial to Tesla's next chapter, toting that it is  a key driver in the company's transition towards autonomous vehicles and AI.

For those of you who may have missed it, here are some of the key takeaways:

• Production to kick off soon: Musk announced that production of the Cybercab would begin “before 2027”, with a target price of under $30,000. He also introduced the Robovan, a bus-like shuttle capable of transporting up to 20 passengers, which he said would reshape cities by "turning parking lots into parks”.
• FSD on the horizon (maybe…): Musk reiterated his belief that fully autonomous vehicles will be safer than human-driven cars and could generate income for owners by being rented out as robotaxis. He anticipates that Tesla's Model 3 and Model Y vehicles will have "fully autonomous unsupervised" technology available in Texas and California next year, pending regulatory approval.
• Who needs that Lidar rubbish!?: Tesla continues to rely solely on camera-based technology for its self-driving capabilities, overlooking more expensive sensors like radar and Lidar used by competitors. Elon believes that artificial intelligence trained on data from Tesla's extensive fleet will compensate for this.

• The market seems skeptical: Analysts and investors both expressed doubts about Tesla’s ambitious timelines and cost estimates. Analyst Paul Miller from Forrester shared his skepticism, mentioning that offering a new vehicle at that price within the proposed timescale doesn't seem possible without external subsidies or Tesla taking a loss on each vehicle.
• Stock Market Reaction: Following the announcement, Tesla's stock price fell nearly 9%, perhaps an indication of investor concern over the lack of concrete details and the company's ability to deliver on these promises. Interestingly, shares of ride-hailing competitors like Uber and Lyft rose by up to 11%, as Tesla’s lack of plans for its robotaxi service seemed to put competitors’ minds at ease.

My Latest Thoughts

After catching up on the Cybercab unveiling, I find myself siding with the market's skepticism. The event promised much but delivered little in terms of concrete details or actionable plans. The presentation felt more like a grandiose spectacle than an update on something so pivotal to the company’s future. Aside from the lack of detail, there are a few other things that have me slightly concerned.

Firstly, the practicality of the Cybercab raises questions. The prototype showcased is a two-door, two-seater vehicle, which seems impractical for in a lot of circumstances. With the average number of people per dwelling coming in at around 2.5, the Cybercab seemingly is unable to accommodate an average household. I understand that a lot of people catch cabs solo, but the fact that the Cybercab is unable to accommodate a family airport drop-off makes me concerned for its overall viability. While the Robovan addresses capacity by offering 20 seats, it swings to the other extreme. Would a 5-person family have to split 3 Cybercabs? Or would they jump in a Robovan with 15 empty seats?

Secondly, regulatory hurdles cannot be ignored. Tesla has faced ongoing scrutiny over its Full Self-Driving (FSD) technology, with repeated delays and safety concerns. The reliance on camera-only systems, as opposed to incorporating Lidar or radar, has been fraught with issues. This approach has arguably caused Tesla to lag behind competitors on the software front. While I have a lot of confidence in Dojo, there seems to be a lot of unanswered questions which should be a concern for Tesla, especially when competitors like Waymo are already operating robotaxi fleets with more advanced and accepted technologies.

Elon Musk's is a habitual timeline-misser and many of his promises have historically missed the mark. I mean, we don’t have to look any further than FSD itself, which Musk promised back in 2016. FSD unsupervised is still not a reality, and so it’s hard to believe that the projections given during the event will be any different. Expecting to have fully autonomous vehicles operating in Texas and California by next year, and the Cybercab in production in 2026, seems overly ambitious. Transitioning from limited FSD capabilities to a fully operational autonomous taxi fleet is a massive leap that doesn't possible within 24 months given the current rate of improvements.

Overall, the presentation struck me as kind of hollow. I’m sure was not alone in wanting a meaty presentation packed with data and updates, but it lacked anything substantial and some much-needed updates on FSD development, launch strategy and economics were clearly missing. I mean, just look at the market’s reaction. It kind of felt like a head-in-the-sand spectacle.

While I acknowledge Musk's optimism and confidence, I personally have more concerns that arose from this latest presentation. The robotaxi concept is no doubt exciting, but its execution is what matters most, and it appears fraught with obstacles that Tesla doesn't seem ready to address at this point.

I’m still very bullish on Tesla’s FSD technology in the long-term, I’m left a little disappointed by this presentation. I can’t help but feel this Robotaxi thing was “something shiny” meant to distract the market from the difficulties Tesla has been having with delivering fully autonomous driving. The Cybercab wasn’t really a part of my whole narrative, so this disappointment hasn’t really had a material impact on my valuation, but let it be known that I come away from this with a few more reservations.