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Tesla (TSLA) finally launched its robotaxi service in Austin yesterday, June 22, meeting the tentative date set by CEO Elon Musk. While both Musk and Tesla are not exactly known for their steadfast commitment to deadlines, it was a welcome break, especially given the fact that the project is running late by years and Musk once touted that 1 million robotaxis would be on the road by 2020.
Both Tesla bulls and bears were eagerly waiting for the robotaxi launch, given how important that service is for the long-term Tesla story. The event turned out to be somewhat “uneventful” by Tesla standards in part because the service was offered on invitation only, and reports suggest that many of those who got the invite were known for their pro-Tesla views.
Also, the company only offered the rides in a limited area that was carefully vetted to avoid complexity. The cars were accompanied by a “safety monitor” who did not sit in the driver’s seat, but did sit in the passenger seat.
Robotaxi Service Was Somewhat of a “Non-Event”
On the bullish side, the launch was held on time, there were no reports of mishaps with the rides, and it was “unsupervised” as technically there was no one at the steering wheel. For context, Tesla advises users to keep their hands on the steering wheel all the time while using its full self-driving technology (supervised) – the same technology that lays the foundation for the robotaxi. Wedbush analyst and long-time Tesla bull Dan Ives was among those who rode Tesla’s robotaxi and came back impressed, saying it exceeded his expectations.
Tesla bears, too, have something to talk about, as it wasn’t “unsupervised” in a strict sense. Moreover, the company seems to have carefully vetted the initial set of passengers to avoid any negative feedback. While both Tesla bulls and bears can claim some victory after the robotaxi launch, the former camp seems to have an upper hand, which is also reflected in today’s price action.
That said, by Musk’s assertion, the robotaxi service won’t move the needle for the company financially until next year. During the Q1 2025 earnings call, he “bet” that there would be “millions of Teslas operating autonomously” in the back half of 2026. Notably, Musk has previously claimed that the bulk of Tesla’s current valuation is linked to its progress on autonomy – something that long-time TSLA stock bulls would attest to.
Meanwhile, the robotaxi launch is now in the rearview, and soon enough, the attention should turn back to Tesla’s other businesses, which don’t seem to be in the best of shape.
Tesla’s Automotive Business Is Under Pressure
Tesla’s car sales plunged 13% in Q1 after registering their first annual decline last year. While the company will release the Q2 delivery numbers early next month, it is expected to see another yearly decline, looking at the registration data so far. It now looks highly unlikely that Tesla will be able to increase its deliveries on a yearly basis in 2025. To make things worse, if the EV tax credit goes away as proposed in President Donald Trump’s “One Big Beautiful Bill Act,” it could further dampen EV sales in the U.S.
Another worry for Tesla could be changes to regulatory credits, as they have accounted for a disproportionately high share of its profits in recent quarters, thanks to vehicle price cuts, which took a toll on the company’s automotive margins. In fact, if not for these credits, Tesla would have posted a loss in Q1.
Tesla’s EV and solar business faces some serious challenges in the near term, and the robotaxi and yet-to-be commercially launched Optimus humanoid robot won’t be able to fill in the void in the short to medium term. While Tesla bulls point out that the total addressable market for robotaxis and humanoids far exceeds the electric car market that the company is currently targeting, it is pertinent to note that the EV transition, at least in the U.S., has been much slower than what analysts were predicting just a few years back.
As for buying Tesla, it has always been a story for optimists who bet on Musk and his persona to reimagine things as we see them today.
That said, I don’t find any near-term triggers that can help bolster Tesla shares as it prepares to report its Q2 deliveries and earnings next month. While I am not in the perma-bear camp and continue to hold my Tesla shares, the company’s stock price hasn’t been this detached from its near-term fundamentals in years.
