Tesla, EV fans excited about Robotaxi, but Wall Street not buying the hype over Elon Musk's big promises

As Tesla’s highly anticipated Robotaxi event, set for Thursday (Friday for people watching or reading this in India), draws near, excitement is palpable among fans of the electric vehicle (EV) maker.

The unveiling of Tesla’s first fully autonomous vehicle, nicknamed the “Cybercab,” has been long awaited.

However, while enthusiasts are buzzing, Wall Street is far more sceptical about the company’s ambitious promises, casting doubt on Tesla’s ability to deliver a functioning driverless taxi service anytime soon.

Regulatory hurdles
Investor concerns are primarily centred around the technological and regulatory challenges Tesla still faces. Analysts believe that Tesla is likely several years away from being able to operate a fully autonomous taxi service.

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Garrett Nelson, a senior equity analyst at CFRA Research, pointed out that Tesla has yet to overcome significant technological hurdles, making it difficult for the automaker to compete with companies like Waymo, which are already much further along in the development of autonomous vehicles.

One of the key issues is Tesla’s Full Self-Driving (FSD) mode, which remains classified as a driver assistance system, requiring human oversight. This makes it difficult for the company to move forward with the level of autonomy needed for a truly driverless taxi service.

Until Tesla can move beyond FSD and deliver a car that operates without any human intervention, many investors are unsure of its ability to make Robotaxis a reality.

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Investor caution amid the hype
Despite the anticipation surrounding the event, many on Wall Street remain cautious. Analysts at UBS acknowledged that while Tesla’s stock might see a short-term boost ahead of the Robotaxi reveal, they are less confident in the company’s ability to meet long-term expectations. There are doubts about Tesla’s ability to deliver a new vehicle anytime soon, despite the hype around the Cybercab.

Another source of investor uncertainty revolves around Tesla’s long-promised affordable $25,000 EV. Many had hoped this would finally be unveiled at the event, but it seems unlikely to happen this year. Truist Securities, in particular, noted that while such a reveal could be a positive catalyst, they don’t expect to see it at this event.

Mixed opinions on Tesla’s future
Not all investors are pessimistic. Some remain bullish on Tesla’s prospects, especially its forays into AI and autonomous driving.

Wedbush Securities expressed optimism, calling the Robotaxi event a “seminal and historical day” for Tesla and a key moment in the company’s growth in AI and Full Self-Driving (FSD) technology. They believe Tesla is an undervalued player in the AI market and see great potential in its Robotaxi plans.

However, outside Tesla’s circle of supporters, scepticism prevails. Last week, Gene Munster, a partner at Deepwater Management, warned on CNBC that the event might be “light on details,” cautioning those expecting significant updates on Tesla’s Robotaxi progress.

Instead, Munster suggested the event could be more of a “launch party” with little concrete information on the company’s future vehicles.

Regardless of the varying opinions, it’s clear that much is riding on the Robotaxi event. Tesla has been touting the potential of autonomous driving and robotaxis for nearly a decade, and fans and investors alike are eager to see what the company has in store.

Jay Woods, chief global strategist at Freedom Capital Markets, summed up the significance, stating that this is the “most hyped event” Tesla has hosted in almost a decade. As the world waits to see what lies “underneath the hood,” the pressure is on for Tesla to prove it can live up to its ambitious promises.