Tesla Motors CEO Elon Musk says the battery-electric-vehicle maker aims to begin public robotaxi rides in Austin, TX, on June 22, but calls the kickoff “tentative” and says the company will be “super paranoid about safety.”
The company, then, is in good company. While some Tesla enthusiasts have been gushing over the company’s self-driving vehicles and projecting more future revenue from self-driving tech than from selling vehicles, there is pessimism and caution among some industry watchers about Musk’s projections of having 1 million self-driving taxis on the road by the end of next year.
Uncertainty Fuels Robotaxi Skepticism
Some bullish Wall Street analysts, but not all, have been pointing to Tesla’s robotaxi plans and self-driving technology as the key driver of future shareholder value. That’s because the volatile CEO has driven great uncertainty over retail sales of Tesla going forward. Though Tesla is historically vague about delivery numbers, it is known that sales have dropped sharply in Europe and the U.S. since the start of this year as a result of consumer protests and backlash against the CEO for his support of President Donald Trump, his role in suggesting deep cuts to the U.S. government and his forcing access to vast stores of taxpayer data by the Trump Admin. for unknown and unregulated purposes.In Europe, Musk’s support of far-right office seekers has created compounding double-digit sales drops in Germany, France, Norway and other countries.
The same capricious public behavior of Musk that has hammered Tesla vehicle sales could more than crimp growth of the company’s robotaxi business as well.
Tesla’s stock received a pair of downgrades from Argus Research and Baird analysts this month leading up to the robotaxi announcement. The analysts say uncertainty after Musk’s recent public spat with Trump is a negative for the BEV maker.
The Baird analysts expect about 6,000 robotaxis could be on the road by late next year, well below Musk’s projected 1 million, anticipating the business could be “harder (and likely less profitable) than the lofty expectations held by several investors.”
Trust Is Job One
Self-driving vehicles and robotaxis require a high degree of trust in the technology and the company behind it, say researchers. “Positive perceptions of technology attributes alone – performs well, no effort to use, supported – are not sufficient for acceptance (of self-driving vehicles). It is also essential that these attributes increase trust in AVs and thereby reduce perceived risk,” researchers say in a paper published earlier this year by European Transportation Research Review. “If potential users have confidence in AVs and thus perceive a reduced risk, the perceived benefits of the technology can be significantly enhanced.”
Tesla’s biggest issue going forward, however, may be the loss of trust in the brand since Musk has been active in divisive, controversial politics as perhaps no other CEO in recent history has been. And because Tesla is less than transparent about retail sales numbers, forcing analysts to follow third-party reporting, trust among big investors is as wobbly as it is for consumers.
Tesla has lost $380 billion of shareholder value from Jan. 1 through June 10 on high instability. Musk’s X social media platform has lost 79% of its value since he bought it, according to financial services company Fidelity.
Baird analyst Ben Kallo points to the risk “stemming from Musk’s political engagements” that has introduced “brand damage and increased volatility.” Baird downgraded Tesla from “Buy” to “Neutral” this past week due specifically to Musk’s “political distractions and overly optimistic robotaxi forecasts.”
Another major issue hanging over Tesla’s robotaxi business, directly impacting the trust issue, is unknown regulatory targeting of Tesla based on the accident history of Teslas and the fluctuating day-to-day state of the CEO’s relationship with Trump. Musk went from being a key advisor to the White House, a frequent presence in the Oval Office and architect of the Department of Government Efficiency (DOGE) to last week heavily criticizing Trump’s budget bill and suggesting the President should be impeached, kicking off a war of words on Musk’s X.
That leaves the Trump Admin.’s treatment of Tesla going forward a complete unknown.
Is the Tech Proven?
Some AV experts question whether Tesla’s system – which relies on AI and a handful of inexpensive cameras, rather than a suite of redundant sensors, for example, can adequately handle the galaxy of unexpected traffic situations.
NHTSA says it is investigating collisions involving Tesla’s current assisted-driving technology to determine if the system can be blinded by common situations such as fog, normal-to-severe sun glare and dust flare-ups like the ones common in the U.S. Southwest’s often arid climate.
In a recent letter to Tesla, Tanya Topka, the director of NHTSA’s Office of Defects Investigation, who is not a Trump appointee, ordered Tesla to share more details about its robotaxi rollout plans. The agency, she wrote, wants greater transparency and reporting on how Tesla’s fully driverless robotaxis will compare to the driver-assistance technology available on Tesla vehicles today.
NHTSA already is investigating Tesla for numerous accidents traced to the BEV’s Autopilot (Level 2 ADAS). There are 51 deaths on record involving Tesla’s Autopilot, with 44 verified by NHTSA. For comparison, NHTSA verified at least 27 deaths due to Ford Pinto gas tank fires when it investigated in 1978 after the subcompact had been on the market for seven years.
Additionally, Transportation Secretary Sean Duffy told CNBC the self-driving industry must be more transparent. “We don't want to punish them. We want to give them better rules.” That suggests that Musk’s robotaxi rollout could be curbed by new rulemaking.
According to NHTSA, Tesla automatically reported over 1,800 crash incidents involving Autopilot/FSD, and over 1,200 of those were since 2021.
The global robotaxi market is projected by some enthusiastic analysts to reach $45.7 billion by 2030, according to MarketsandMarkets.
But there are numerous unknowns: cities that balk at approving or putting strict restrictions on them; consumer acceptance when inevitable robotaxi accidents go viral in social media and attract coverage by the traditional media; uncertainty of U.S. and European Union regulations; litigation; actual costs of operating large driverless fleets, and hostility toward Musk by city governments led by Democrats.
Thus, there is no shortage of skepticism about the profit returns and the rapid scaling up of robotaxis.
