Tesla’s much-vaunted ‘robotaxi’, a vehicle industry experts believe billionaire owner Elon Musk is betting the future of the company on, has been delayed.
He confirmed Tesla will push back an event showcasing robotaxi prototypes by about two months, to October to allow more work. He said the additional time would allow it to improve the robotaxi design, and better prepare some other items to show off during the product reveal.
Musk has claimed the project, which crucially includes the computer self-driving software to operate them and ultimately transform every other Tesla vehicle into a “giant autonomous fleet” could take the company’s valuation as high as $30trn – much greater than its current $775bn value.
The robotaxi and the software required to operate them “unsupervised” has become a key part of Tesla’s future according to the billionaire. Musk laid off more than 10 per cent of the electric car makers staff as he repurposed Tesla towards developing AI-powered products, including what he termed as a “balls to the wall” drive toward developing vehicle autonomy.
“Though timing of robotaxi deployment depends on technological advancement and regulatory approval, we are working vigorously on this opportunity given the outsized potential value,” the company told shareholders.
The idea of creating an autonomous taxi service has been a key plan at the car maker for several years and was reportedly part of Musk’s masterplan for the company when he originally became involved. He is said to have prioritised the project over work on an electric vehicle cheaper than Tesla’s most affordable car, the Model 3.
Musk, fresh from the court victory over shareholders who contested his $56bn pay package, said Tesla plans to spend $10bn this year alone on AI-related expenditures.
“The value of Tesla overwhelmingly is autonomy,” Musk repeated to analysts, referring to self-driving vehicles. “If you believe Tesla will solve autonomy, you should buy Tesla stock, and all these other questions are in the noise.”
“My predictions on this have been overly optimistic in the past,” he said. “I would be shocked if we cannot do (unsupervised full self-driving) next year.”
Critics have questioned Musk’s bravado over the robotaxis and point out it is a vehicle that hasn’t been seen and may not actually exist. Musk did not answer questions whether the vehicle will have a conventional steering wheel or pedals. Experts say that without either there will be further delay regulatory safety approval for its use on public roads.
Meanwhile rivals Waymo are already operating up to 50,000 passenger trips every week despite early technical hiccups which saw them stopped from operating in some Californian towns and cities over safety concerns. Waymo, the driverless car division of Google parent Alphabet, currently operates in parts of San Francisco. Attempts to roll-out its robotaxi service to Sunnyvale and Los Angeles were suspended for up to 120 days following a ruling by the California Public Utilities Commission’s Consumer Protection and Enforcement Division (CPED).
“This will provide the opportunity to fully engage the autonomous vehicle maker on our very real public safety concerns that have caused all kinds of dangerous situations for firefighters and police in neighboring San Francisco,” a CPED official said at the time.
Tesla faces squeezed profits as it places such major and expensive bet on autonomous driving technology. Its latest figures revealed that while its revenues rose marginally to $25.5bn its profits fell 45 per cent to $1.5bn (£1.2bn) in the second quarter of the year. It warned growth this year would be “notably lower.“
The world’s most valuable car manufacturer, has responded to a slump in EV sales by reduced prices and encouraging purchases via cheap financing to maintain sales of its vehicles. At the same time Tesla is facing greater competition, particularly from Chinese EV rivals.
“There were quite a few competitor vehicles hitting the market, which haven’t done very well, but they have discounted these vehicles very heavily,” Musk told analysts.
Tesla sales have fallen for the past six months, the first back-to-back quarterly sales decline for more than a decade. “We believe that a pure EV is the optimal vehicle design and will ultimately win over consumers as the myths on range, charging and service are debunked,” the company said.
It delivered fewer cars in the first half of the year, despite the company adding the new Cybertruck to its line-up.
General Motors announced it was indefinitely suspending production of its self-driving Cruise Origin robotaxi. The Origin created “regulatory uncertainty” owing to its design, Mary Barra, chief executive of GM, told shareholders.
The Origin was originally designed as an automated self-driving taxi with no steering wheel or pedals, no obvious front or rear, and no driver position. However, estimates put each vehicle’s cost too high to make them viable and despite saying last year it was “just days away” from regulatory approval, GM has abandoned the purpose-built EV and would now concentrate on developing another vehicle, the Chevy Bolt.
“I do think in the future there’s going to be opportunity for Origin – and so that remains open to us at the right time,” GM CEO Mary Barra said.
Analysts and industry experts have said the race to develop autonomous driving systems and robotaxis will be tough, expensive and take years as the technology faces engineering and regulatory hurdles.
GM said its decision to pause Origin production at a Detroit plant would cost the company $583m.
“The main reason with switching from the Origin to the Bolt is we extinguish the regulatory risk,” Barra said.
Musk said the reason Cruise had backed away from the Origin was more because it could not make the technology work. “They’re blaming regulators. That’s misleading to do so,” he said. “It’s just that their technology is not up to par.”