Seeking Alpha – Tesla’s Sudden Third Robotaxi Announcement, After 2019 And 2016

See full original article by Anton Wahlman at Seeking Alpha

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Summary

• Tesla, for the third time in eight years, dangles the robotaxi carrot, with an announcement scheduled for August 8, possibly meaning 2024 and not 2044.
• Tesla first announced in October 2016 that all Teslas produced as of then were Level 5 (robotaxi) capable, pending a software download.
• Tesla held a major robotaxi event in April 2019 and promised one million robotaxis on the road by 2020. It, too, was false.
• Today’s robotaxi pre-announcement came hours after the Reuters article claiming that Tesla halted the development on its $25,000 “Model 2” vehicle.
• In my opinion, this shows an unusual level of stress and desperation by Tesla’s highest leadership. Things must be really bad.

Elon Musk announced after the close of market today, April 5, that Tesla (NASDAQ:TSLA) will unveil a robotaxi on August 8. He didn’t say what year, but maybe we should assume it will be 2024:

I and many others laughed when we saw this announcement today, because it was so obvious what had just happened. Relatively shortly after the market opened, Reuters published a bombshell, citing sources and documents saying that Tesla had abandoned — at least temporarily — the development of its $25,000 “Model 2” car, that may have otherwise seen large-scale production commence as early as 2027 or 2028:

Exclusive: Tesla scraps low-cost car plans amid fierce Chinese EV competition

Reuters had sought Tesla for comment before publishing, but received no response. Upon publishing the article, the stock fell at least 4% in immediate reaction. Then, after the Reuters article was published, Musk posted a denouncement without specifying what in the article he thought was wrong:

Based on Musk’s denouncement, Tesla’s stock recovered some of its losses earlier in the day.

In the Reuters article, they claim to have multiple sources and that they have seen various documents/correspondence that support their central claim. Musk says that they’re wrong. I am not offering an opinion on who is right, because I simply don’t know and haven’t seen any evidence either way. Other investors, long and short, are likely in the same boat.

Elon raises the stakes

So far, so good. Barring an invasive investigation, this story would likely have blown over, awaiting something Tesla would likely elaborate on its April 23 financial results conference call and in the 10-Q that is typically filed within a few days thereafter.

Yet, Musk could not let this issue go. After the market closed, he tweeted the aforementioned robotaxi announcement for August 8, possibly 2024.

It is blindingly obvious to me that this was not the plan as of just a few hours prior. Without a doubt, this announcement was decided on the fly, in response to the Reuters kerfuffle. But why? And what does it mean?

Definitions first

Anyone “in the industry” often takes public knowledge of industry definitions for granted, yet that always proves to be the first point of contention. What is a robotaxi? It is a car that is able to drive 100% by itself, as safely as the average human driver. Drive where, and when? Same as a human driver: Everywhere, in any weather, under any circumstance.

It’s a tall order. It’s one thing to drive in nice weather at slower speeds, in a geofenced area. Navigating a snowstorm in Park City, Utah, and going off-road? Much more difficult.

Robotaxi is also referred to as “Level 5” autonomy. When someone says “Level 5” they mean robotaxi: No driver input of any kind: The car can drive by itself, with no person onboard, or with a blind person, sitting in the back seat.

Fool me again

This is not the first time Elon Musk has promised Level 5 (robotaxi) capability. The first time was on October 19, 2016, when Musk hosted a conference call proclaiming this [transcript}:

Transcript: Elon Musk’s Autopilot 2.0 Conference Call

Here are the very first words out of Musk’s mouth:

“Basic news is that all cars exiting the factory have hardware necessary for Level 5 Autonomy so that’s in terms of Cameras, Compute Power, it’s in every car we make on the order 2,000 cars a week are shipping now with Level 5 literally meaning hardware capable of full self-driving for driver-less capability.”

That was big news in October 2016 — and would have been big news even if he had said it today for the first time. The fundamental problem was that it apparently wasn’t true. Not a single car Tesla has made — millions — since this Level 5 (robotaxi) proclamation in 2016 has been anywhere near Level 5. It hasn’t even been Level 4 or Level 3. Tesla’s “full self driving” system remains a Level 2 system: You must keep your hands on the wheel and eyes on the road at all times, just like your Volkswagen Bug from 1972, or at least Volvo from 2014.

Fool me once, shame on you.

April 2019: One million robotaxis!

Some of you may remember Tesla’s second nonexistent robotaxi launch, from April 22, 2019. The article I wrote that day, about that event, holds up very well to this date:

https://seekingalpha.com/article/4255810-tesla-re-runs-october-2016-press-conference-2_5-years-later

Musk famously promised that Tesla would have one million robotaxis on the road within a year after this April 2019 presentation. In other words, by (April) 2020. Well, we are now in April 2024 and Tesla still does not have a single robotaxi anywhere. Tesla remains stuck at Level 2 autonomy, let alone Level 3 of Level 4. No Level 5 (robotaxi) in sight.

In fact, Tesla has not even begun testing robotaxis. You see, automakers have to file drive reports with regulatory authorities, especially in California (where Tesla’s driver-assistance work has been based since inception), showing their work, how it is going from a safety perspective. Companies such as Waymo (owned by Alphabet) and Cruise (owned by General Motors) have been filing these reports for many years. As of February 2024, they had collectively reported 6 million miles driven in these tests:

2023 Disengagement Reports from California

How many robotaxi test miles has Tesla reported? Look in the report: Zero. Yes, zero.

There are only two possibilities:

1. Tesla has not begun testing robotaxis.
2. Tesla is testing robotaxis, but refuses to report their mandatory test results to the authorities as required.

Pick your poison. It is bad either way.

Fooled me twice, shame on me (or you).

And now, fool me yet again?

It has been FIVE (5) years since Tesla’s second robotaxi (Level 5) announcement. This routine had become comical already months after the first (October 2016) robotaxi announcement. Obama was President then. Nvidia was a nearly unheard-of small-cap company. Milli Vanilli was fresh in memory. Promises were made, and it was a long time ago.

Tesla has its back against the wall

As we saw only a couple of days ago, on April 2 with Tesla’s quarterly unit sales report, Tesla’s business is now in outright decline on its most generous metric (unit sales). Margins have been coming down for a year. Then came this Reuters article claiming that the $25,000 “Model 2” development had been halted. All of a sudden this “August 8” reveal of the Tesla robotaxi pops out of Musk’s twitter account. How convenient!

As we used to say during The Cold War, it is not a coincidence. The rivets on the Tesla stock market supertanker were starting to pop, down over 50% from its November 2021 high. Musk panicked and is now, yet again, promising a robotaxi “unveil” on August 8, possibly meaning 2024 as opposed to 2025 or 2044.

I have no doubt that Tesla will produce an impressive demo and promise that it will soon be available, “pending final software testing.” Therein lies the rub: There is always a “but” and this “but” now has us at almost eight full years since the first robotaxi (Level 5 autonomy) announcement in October 2016. Still no (recent) testing filed with the authorities, still needing to have your hands on the wheel and eyes on the road. Nowhere close to driverless.

I doubt this “robotaxi” will be made available for truly independent and universal testing on August 8, regardless of year. Rides will likely be offered in ideal sunbelt weather, in familiar surroundings (Silicon Valley, Austin etc). Rides will likely be heavily supervised. In other words, not the real world — not Level 5 and therefore not a viable robotaxi.

I am sure that we will hear confident statements from Musk that we are finally “extremely close” but we have heard that movie before. There is just no evidence for it.

Analyst’s Disclosure: I/we have a beneficial short position in the shares of TSLA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

At the time of submitting this article for publication, the author was short TSLA. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by major automakers.

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See full original article by Anton Wahlman at Seeking Alpha