Tesla's RoboTaxi Concept Car Launch Imminent, Musk Claims "History in the Making"

Tesla's RoboTaxi Concept Car Launch Imminent, Musk Claims "History in the Making"Tesla CEO Elon Musk is set to unveil a robotaxi concept car on October 10th in Los Angeles, marking the company's first new product launch since the Optimus humanoid robot prototype two years ago. Reports suggest Musk has rented out the entire Warner Bros

Tesla's RoboTaxi Concept Car Launch Imminent, Musk Claims "History in the Making"

Tesla CEO Elon Musk is set to unveil a robotaxi concept car on October 10th in Los Angeles, marking the company's first new product launch since the Optimus humanoid robot prototype two years ago. Reports suggest Musk has rented out the entire Warner Bros. studio lot outside of Hollywood, indicating a grand scale for the event. Wedbush Securities tech analyst Dan Ives calls it a "pivotal day for Tesla."

While Musk tempered expectations before the Optimus unveiling, he's setting the bar high from the start this time. He posted on social media this Wednesday, "This will be history in the making." As Tesla's CEO, Musk has placed his bet on a key question: Can his team crack the complex problem of fully autonomous driving? This technology, which Musk describes as a nascent form of artificial general intelligence, is extremely intricate.

Currently, Tesla electric vehicles already employ sophisticated onboard computers for self-driving capabilities. These computers are trained using video data collected by Teslas driving on the road. However, the vehicles can still make wrong decisions in critical moments, requiring constant oversight, much like a teenager learning to drive. Musk says eliminating this risk will be Tesla's "ChatGPT moment." This breakthrough would usher in the biggest asset growth in history, as millions of existing Teslas could become driverless with the press of a download button.

Once activated, these vehicles could generate $30,000 annually in taxi income for their owners while they eat, sleep, or work. That figure, cited by Tesla in April 2019, translates to nearly $37,000 today. As a result, Musk has recently warned investors skeptical of Tesla's self-driving goals: If you don't believe in it, sell your shares. He told shareholders in July, "Anyone who doesn't believe that Tesla can solve autonomous driving... should sell their Tesla stock. If you believe Tesla can solve it, you should buy Tesla stock."

Musk estimates the technology's value could easily reach $5 trillion, making Tesla the most valuable company in the world. Robotaxis would also transform Tesla's profit model, shifting from reliance on car sales to being more like a software company: licensing its Full Self-Driving (FSD) software at high-profit margins, creating stable recurring revenue. Will McDonough, chairman and CEO of asset management firm CorestoneCapital, believes this subscription-based revenue model is exactly what institutional investors crave. He says in an interview, "Car sales are one-time events, and this is recurring monthly revenue. That predictable cash flow is what Wall Street wants."

But Musk's ambitions go even further. Cars specifically designed to pick up passengers, without steering wheels or brake pedals, are the ideal tools. This is likely the visionary concept car he'll showcase on October 10th. These vehicles could compete with Uber without the cost of drivers. In April, just mentioning Musk's robotaxi plans sent Uber stock prices plummeting. Brad Ferguson, president of financial firm HalterFergusonFinancial, says research shows there's a service gap in the US ride-hailing market. If Tesla can close the gap in its rival's decade-long head start, it has a real opportunity to fill that space. He hopes the unveiling will raise consumer awareness and attract businesses interested in running fleets of Tesla robotaxis. He says, "It's a huge market opportunity for a new entrant to offer rides on a massive scale at $2 a mile or less. People generally think of Uber and Lyft as being for tourists, but we've found that the vast majority of riders are locals using it to get to and from work."

Part of the reason for the intense focus on the October 10th event is that optimism surrounding robotaxis has helped stabilize Tesla's stock price, supporting what should have been a decline given its slump in profits. Current earnings expectations for next year are only back to around $3.12 per share in 2023, still below the record high of $4.07 in 2022. Yet, Tesla shares have remained flat this year, with a price-to-earnings ratio exceeding 80 times next year's projected earnings. DataTrek's co-founder Nicholas Colas calls Tesla stock a "belief stock."

Fortunately, the timing for the event is also opportune. The high cost of borrowing has limited consumers' ability to take on hefty monthly car loan payments. Market sentiment has been picking up since the Federal Reserve cut rates by half a percentage point and signaled more may be on the way. Next week's quarterly car sales figures are expected to show the first year-over-year increase since 2023. Some Tesla bulls, like Gary Black, managing partner at Future Fund Management, warn that historically, this announcement could be another "buy the rumor, sell the news" event.

But Musk doesn't seem to think so, perhaps because he has other products in store. When Tesla pushed the reveal back by two months due to design adjustments, Musk said it also gave the team time to "show some other things." This could include the second-generation Tesla Roadster electric sports car. In February, Musk promised to unveil this car by the end of the year and called it a complete redesign of the 2017 concept vehicle.

The reason for this is that Tesla currently has no two-seater car on sale, so releasing a new one would not threaten sales of existing models. If the company does release a new Roadster, there's little risk of customers canceling existing orders for the new vehicle. The invitation reads "WeRobot," suggesting Musk could also show off the latest Optimus robot prototype. He sees Optimus transforming Tesla into an AI and robotics company.

Tesla did not immediately respond to a request for comment. CorestoneCapital's McDonough says he can even imagine more news being announced, like investors expect at Apple events. This could relate to Musk's other ventures, like the rumored integration of xAI's Grok chatbot into Tesla cars. "The ticker symbol should be E-L-O-N, not T-S-L-A," McDonough says, "because what everyone wants is Musk's company."