Tesla Shares Drops 9% After Cybercab Reveal

Tesla shares fell nearly 9% on Friday after the company’s highly anticipated robotaxi event failed to meet investor expectations. The unveiling of the Cybercab, a self-driving concept car, left many analysts disappointed.

The Cybercab Unveiled

During the “We, Robot” event on Thursday night, CEO Elon Musk introduced the Cybercab, a sleek, low, silver two-seater vehicle designed for autonomous driving. Notably, the Cybercab lacks traditional steering wheels and pedals, aligning with Musk’s ambitious vision of creating a fleet of autonomous vehicles and robots. Musk announced plans to start production of the Cybercab before 2027, although he did not specify the manufacturing location. He also mentioned that consumers could expect to purchase a Tesla Cybercab for under $30,000.

In addition to the Cybercab, Musk unveiled plans for an autonomous electric Robovan that could transport up to 20 people or goods. He claimed this vehicle would address high-density transportation needs, such as ferrying sports teams.

Investor Reactions

Despite the bold announcements, the investor reaction was tepid. Analysts expressed disappointment with the event’s execution. Jefferies issued a note titled “We, underwhelmed,” and Barclays criticized the event for lacking immediate opportunities for Tesla. They noted that the presentation focused more on Musk’s long-term vision for fully autonomous driving rather than actionable details. Barclays analysts remarked that, similar to past Tesla product unveilings, the event provided few specifics, emphasizing the overarching vision for Tesla’s AI and autonomous vehicle growth.

The lack of near-term updates on the Full Self-Driving (FSD) system and any data showing progress raised concerns among analysts. Piper Sandler analysts warned that many trading-oriented firms might feel underwhelmed by the robo-taxi presentation and predicted a potential stock sell-off in the coming weeks.

Concerns About Positioning and Progress

Morgan Stanley analysts criticized Musk for not effectively positioning Tesla as a leader in artificial intelligence during the event. They pointed out the absence of details regarding improvements to the FSD system and updates on possible collaborations between Tesla and Musk’s AI company, xAI. They expressed disappointment with the overall substance of the presentation, predicting ongoing pressure on Tesla’s stock.

Experts emphasize that it may take years for Tesla’s self-driving cars to appear on public roads, largely due to regulatory concerns over safety features. Paull Miller, an analyst at Forrester, suggested that the proposed price of $30,000 for the Cybercab might be unrealistic. He noted that without external subsidies or accepting losses on each vehicle, achieving that price point within the next decade seems implausible.

Competition in the Autonomous Vehicle Market

In contrast to Tesla’s challenges, companies like Alphabet’s Waymo have successfully launched robotaxi services to the public since June. This highlights the competitive landscape Tesla faces in the autonomous vehicle market and raises questions about the feasibility of Musk’s ambitious plans.