Elon Musk Ignores the World’s Electric Vehicle Craze, Announcing Tesla’s Upcoming Venture with a Potential $1 Trillion Revenue, and There’s ‘No Competitor in Sight’

While Musk consistently highlights the potential of robotaxis—self-driving cars that can transport paying passengers without a driver—many remain concerned about their safety and the viability of this business model.

Traditional automakers like General Motors have abandoned plans to develop a similar service after investing billions of dollars, citing the required resources as “enormous” and the increasing competition in the robotaxi market. Ford has also halted its efforts to develop self-driving cars entirely.

However, even as the big players retreat, some experts argue that the true competitors to Tesla’s robotaxis are the human drivers of ride-sharing services like Uber and Lyft.

“The challenge is not in the technology but in the economics,” says Bryant Walker Smith, an expert on self-driving cars at the Center for Internet and Society at Stanford Law School. “If a company has to pay engineers, mechanics, and remote support staff while competing with Uber drivers who make less than minimum wage driving their old cars, that’s a tough proposition.”

This hasn’t stopped Musk from making bold predictions about how this technology will transform Tesla and the world.

“I don’t see anyone being able to compete with Tesla right now,” Musk said during an earnings call in April. “I think Tesla will [have] like a 99% market share or something crazy.” Musk also boldly declared that robotaxis will soon bring in $1 trillion in annual revenue for Tesla.

HITTING THE ROAD

Musk noted in his post that June 22 is still a target date. Whenever it officially launches, Tesla will be playing catch-up with several already-operational services.

“There are actual robotaxis out there right now. They’re just not from Tesla,” said Smith.

A prime example is Waymo, a subsidiary of Alphabet (Google), which currently offers 250,000 paid rides per week across four US cities: San Francisco, Los Angeles, Phoenix, and Austin. Similar services are already operational in China as well.

While Alphabet doesn’t disclose financial details for Waymo, the unit lost $4.1 billion last year, despite Alphabet investing $5.6 billion. However, with a net profit of $100 billion, this is a relatively small amount. In comparison, Tesla reported a net profit of $7 billion—a 53% decline from the previous year.

Waymo started paid rides in 2020 and is growing rapidly—ride volume has increased by over 50% in just the last six months. Last month, Waymo announced it had surpassed 10 million paid rides—double the number from the end of last year.

“We want to help these companies succeed by investing in them and partnering to bring their products to market,” he said. “This technology is very promising, but it has taken billions of dollars and nearly 20 years to develop. Now it’s time to get it out there, and we want to help build that ecosystem.”

NEW TECHNOLOGY, OLD CONCERNS

Just as people once paid to have elevator operators despite the availability of automatic elevators due to safety concerns, robotaxis may face similar fears.

Smith notes that many people are initially anxious when they get into a self-driving car, but within a few minutes, they’re typically comfortable and engrossed in their phones.

Tesla currently utilizes its “Full Self-Driving” (FSD) technology, which relies solely on cameras without the use of radar or lidar (laser) to detect obstacles. In contrast, Waymo and many other self-driving car companies use lidar for safety reasons.

Musk has mocked the use of lidar, writing on social media, “Humans don’t shoot lasers out of their eyes to drive, so why should a self-driving car? Give it a try. Our AI is like a child, but it will grow in capability faster than any human. Just needs more data.”

He referred to lidar as an “expensive sensor that is unnecessary” and “foolish.”

By forgoing lidar, Tesla reduces costs compared to Waymo, but many experts argue that lidar is safer for detecting obstacles, especially people.

The National Highway Traffic Safety Administration (NHTSA) has launched multiple investigations into the safety of FSD, including a fatal accident involving a Tesla using FSD that struck a pedestrian.

The NHTSA stated that the vehicle involved in the accident entered a area with limited visibility due to sunlight glare, fog, or dust.

Smith commented, “If humans could shoot lasers out of their eyes to avoid sun glare or fog, that would be fantastic. But right now, only machines can do that.”

A MUCH-NEEDED WIN

Tesla is in dire need of a boost. Sales and profits are plummeting, with year-over-year sales declining for the first time and the most substantial quarterly drop in the latest quarter, partly due to negative reactions to Musk’s political activities.

Tesla’s stock, which peaked in December last year due to expectations of a favorable relationship between Musk and then-President Donald Trump, has fallen by 30% since.

Musk and many investors remain confident that Tesla’s value will “explode” due to autonomous driving technology and the robotaxi service, as self-driving cars can operate far more hours than human drivers.

“I think this will be the biggest increase in asset value in human history,” Musk told investors in January.

Tesla did not respond to requests for comment.

However, since 2019, Musk has consistently promised that this service is “a year away” from deployment, and it has yet to materialize.

Gordon Johnson, an analyst at GLJ Research and a frequent Tesla critic, believes that this launch is merely a demonstration and not a true commercial test.

“This is Tesla proving the concept, not a real-world commercial test,” Johnson wrote in a client note.

Smith believes that Musk is unlikely to deliver on this promise any more than his previous ones.

“I don’t understand why people still believe what he says,” Smith remarked. “When it comes to the future, it’s important to recognize that Tesla has yet to demonstrate that they can turn that future into a reality.”

Source: CNN