Self-driving car entrepreneur Elon Musk is nothing, if not ambitious. Earlier this week, he promised to have a million robot taxis on the road by next year, taking dead aim at Uber and Lyft. But responses have changed in recent years from Wow! To “Oh. Really?”And prompted comparisons to shady showman P. T. Barnum:
“I feel very confident predicting 1 million autonomous robo-taxis for Tesla next year,” Musk told a room of investors and Wall Street analysts at the company’s Palo Alto, California, headquarters. “Not in all jurisdictions because we won’t have regulatory approval everywhere, but I’m confident we will have regulatory approval at least somewhere, literally next year. ”Graham Napier, “Elon Musk says Tesla will have 1 million robo-taxis on the road next year, and some people think the claim is so unrealistic that he’s being compared to PT Barnum” at Business Insider
In theory, autonomy means no need to pay drivers. But the market isn’t rallying behind Musk’s vision. One industry analyst described the proposal as “half-baked” and suggested,
“We see the focus on FSD [full self-driving] as a desperate attempt to convince Tesla car buyers to pay the $8,000 for the “FSD” option, even though the company acknowledges the software doesn’t work and they will have a new next-gen solution in ~2 years.”Graham Napier, “Elon Musk says Tesla will have 1 million robo-taxis on the road next year, and some people think the claim is so unrealistic that he’s being compared to PT Barnum” at Business Insider
Jonathan Bartlett, research and education director of the Blyth Institute, told Mind Matters News,
I’m actually quite amazed that Elon even made the suggestion. Not only is the car not ready for autonomous driving, the company has not even started work on the ride-hailing software needed to support it. Additionally, the numbers presented at the conference show a complete lack of understanding of even the basics of what it costs just in maintenance to run a taxi service. I’m a fan of fresh, innovative ideas and sharing them with others. But the latest series of press conferences and demos that Tesla has held has shown that the company can’t distinguish between half-baked brainstorms and actual business plans.
There’s been considerable speculation recently about whether the million-bot taxi fleet is intended to distract attention from a looming bad first-quarter report for Tesla. Well, the report was released today:
● For the first quarter of 2019, Tesla reported losses per share on an adjusted basis of $2.90, versus 69 cents expected by analysts, according to Refinitiv.
● Tesla’s revenue for the quarter reached $4.54 billion, missing the $5.19 billion expected.
● Shares in Tesla, which closed down by about 2 percent Wednesday, ticked up after the markets closed.Laura Kolodny, “Tesla misses big on first-quarter earnings as demand fell for electric cars” at CNBC
If we start by assuming that the next taxi one of us hails will be driven by a human being, what’s really going on here?
Industry watchers suspect that the circus is intended to distract attention from the fact that Tesla is desperately hurting for cash: “Tesla faces a cash crunch with a $920 million debt payment due Friday” (February 27, 2019, CNBC). Warning sign: “Tesla Raises Prices as Musk Backtracks on Closing Stores: It makes it seem like Tesla is making decisions on the fly and reacting to very short-term factors.” (March 11, 2019)
One Tesla watcher notes that in the yearly investor letter Tesla announced an expansion of all the stores. Then, less than three weeks later, it decided (and announced) that the stores would all be closed and all sales would be moved online. Less than a week later, it decided (and announced) that it would not close the stores after all. One suggested factor is long-term leases that Tesla couldn’t just walk away from. But most businesses figure in such contractual obligations as soon as they contemplate, let alone discuss, any big change.
The crazy may stem partly from the fact that Elon Musk’s personal fortune is “deeply entwined” with Tesla and he has heavily leveraged his holdings, reportedly borrowing hundreds of millions of dollars against his shares. Earlier this month, Tyler Durden reported at ZeroHedge that “things are getting uglier by the day.” Complicating the picture is that Elon’s younger brother Kimbal Musk is a director of Tesla. His financial affairs are heavily involved with the company as well; plus, he is unpopular with many shareholders.
In short, Musk and Tesla might have had reason to stage the three-ring circus around robo-cabs this week, to distract attention from the quarterly report and also from the true state of the technology:
Tesla is claiming to have made a technological breakthrough so grand that its vehicles will have Level 5 autonomy by next year, yet it has offered little to support that bold assertion. If anything, Tesla’s Autonomy Day has raised even more red flags. Investors should approach the near-term market potential of self-driving cars with extreme skepticism.John Engle, “Tesla Robotaxi Plan Is Worse Than Half-Baked” at Seeking Alpha (April 23, 2019)
Walter Bradley Center director Robert J. Marks offers a reality check for the rest of us:
Definitions are needed before discussing Musk’s claim about self-driving taxis. As Bradley Center Fellow Jonathan Bartlett notes, there are five levels of self-driving cars. If your car has adaptive cruise control, you are driving a Level 1 self-driving car. Most people think Level 5 when they hear the term self-driving car.
Level 5 self-driving cars, the most sophisticated, could autonomously traverse the curvy single lane dirt roads that follow mountain contours in my native state of West Virginia. You meet a logging truck coming the other way and must negotiate a way to pass each other. Elon Musk will not have Level 5 taxis on the road next year.
It didn’t help that on Autonomy Day, one of the self-driving vehicles was caught violating traffic laws: “The demo conveniently bypassed the toll booth, by using lanes compatible with the “FasTrak” transponder.” It was reported to be traveling at 45 MPH in a 25 MPH zone.
See also: Guess what? You already own a self-driving car! Tech hype hits the stratosphere. (Jonathan Bartlett)
Self-driving vehicles are just around the corner. On the other side of a vast chasm…