Tesla shares drop nearly 9% as Cybercab unveiling 'underwhelms' investors 73 / 100

Tesla shares closed down nearly 9% on Friday following the company's long-anticipated robotaxi event, which did not meet investor expectations.

CEO Elon Musk introduced the Cybercab, a low, silver two-seater self-driving concept car, during the “We, Robot” event on Thursday night.

The vehicle, which lacks steering wheels and pedals, is part of Musk's ambitious plan to create a fleet of autonomous vehicles and robots.

Musk stated that Tesla aims to begin production of the Cybercab before 2027, although he did not specify where the cars would be manufactured.

He also indicated that consumers could purchase a Tesla Cybercab for under $30,000.

In addition, Musk announced plans for an autonomous electric Robovan capable of transporting up to 20 people or goods, which he said would “solve for high density,” such as transporting a Sports team.

Despite the ambitious announcements, analysts expressed disappointment with the event. Jeffries released a note titled “We, underwhelmed,” while Barclays stated that the event failed to highlight any immediate opportunities for Tesla, instead focusing on Musk’s vision for fully autonomous driving.

Barclays analysts noted, “As expected, like prior Tesla product unveils, the event was light on the details, and instead emphasized the vision underpinning Tesla’s growth endeavors in AI/AV [autonomous vehicles].”

They pointed out that no near-term updates on the Full Self-Driving (FSD) system's progress or data showing improvements were provided.

Piper Sandler analysts echoed this sentiment, suggesting that “most trading-oriented firms will be underwhelmed by the robo-taxi unveiling,” and warned, “We wouldn’t be surprised if the stock sells off in the coming weeks, as pre-event momentum fizzles.”

Morgan Stanley analysts criticized Musk for failing to position Tesla as an artificial intelligence company during the event. They highlighted the lack of details regarding improvements to the FSD system and the absence of updates on potential collaborations between Tesla and Musk's AI company, xAI.

They remarked, “Overall, we were disappointed with the substance and detail of the presentation,” predicting ongoing pressure on Tesla's stock.

Analysts emphasize that it will likely be years before Tesla's self-driving cars are seen on public roads, with regulatory concerns regarding safety features remaining a significant hurdle.

Paull Miller, an analyst at Forrester, suggested that the proposed $30,000 Cybercab may not be a realistic target.

He stated, “It will be extremely difficult for Tesla to offer a new vehicle at that price within that timescale,” noting that without external subsidies or losses on each vehicle, launching at that price this decade seems implausible.

In contrast, companies like Alphabet’s Waymo have successfully launched robotaxi services to the public since June, highlighting the challenges Tesla faces in the autonomous vehicle market.