77% Of Tesla's Stock Value Rides On Self-Driving
Tesla has always ridden on big dreams and even bigger promises. The automaker has a history of betting it all on risky situations - and generally, those moves have paid off. It's not only the lone successful automotive startup the world has seen in about a century, it's also worth more than USD1 trillion these days.
You can attribute that sky-high valuation on Tesla's biggest bet of all: autonomy. The automaker, which would rather be viewed as a AI and tech company that just happens to build cars, believes it can solve self-driving with its Full Self-Driving software and its upcoming Robotaxi product. And investors believe that this risk could lead to a huge payday if it pays off.
And if it doesn't? Well, that's potentially 77% of Tesla's value circling the drain, according to RBC Capital analyst Tom Narayan.
"Robotaxis account for 44% of [Tesla's] valuation," explains Narayan, later continuing: "FSD accounts for another 33% of our valuation and we see private AVs becoming living rooms, bedrooms and offices on wheels. These will also be purpose-built vehicles."
Narayan says that the firm believes that FSD will ultimately reach the SAE designation of Level 4, which means that vehicles with FSD can drive themselves in certain conditions and would not require a human to take over at any point in time while the vehicle is driving in its Operational Design Domain. Think driverless taxis (like the Cybercab) operating in select cities. Tesla CEO Elon Musk previously claimed that Tesla would reach in 2023.
The problem? Tesla isn't remotely close to the finish line.
Musk claims that Tesla will have its Robotaxi - which, mind you, comes without a steering wheel or pedals - in production before 2027. For those counting, that leaves just 409 days to solve self-driving and iron out production of a next-generation vehicle.
Outside of its We, Robot Robotaxi event at the Warner Brothers studio, Tesla has yet to show significant progress in real-world self-driving headway. But it does claim that it has been testing out autonomous rides for employees in California, though, and officials in Palo Alto are already knocking at Tesla's door to be one of the first cities where the automaker deploys its Robotaxis. That is, of course, assuming that Tesla receives regulatory approval for these trials.
Elon Musk's new bestie Donald Trump, has recently signaled interest in a federal Autonomous Vehicle Framework that would essentially prioritize deregulating AVs and pave the path for faster deployment across the U.S. Whether or not Tesla has the technical prowess to back it up is leaving some room for doubt, though.
From Narayan's note:
"While we do see federal deregulation on AVs as a positive for Tesla, the company still has a ways to go to prove that its camera based system will ultimately work with limited interventions. As we understand it, FSD's next version (13.0) is tracking at ~10k miles before intervention, compared to Waymo's 17k level. Moreover, in states like California, getting robotaxi licenses might mandate using lidar systems. It is unclear to us if creating a federal AV policy framework would supersede."
The 10k miles before intervention is what Musk claims without providing any proof. Independent testing by AMCI and crowdsourced data showed only around 13 miles before intervention. Even if Tesla improves by 10x, it is still not ready for self-driving.
If Tesla delivers on its promises (in part, thanks to Musk's political manuevering), its stock could go to the moon. This is huge for investors, especially those who had many unanswered questions following its lackluster Robotaxi presentation last month. But there's significant competition from companies like Cruise and Waymo, both of which have been real-world testing for years with dedicated teams and more robust hardware stacks. It's an uphill battle for Tesla, which has proven critics wrong before - but never with this much on the line.
Tesla EVs' FSD have encountered many problems such as sometimes not being able to detect small or big objects in front of the EVs, accidents in low visibility conditions and crashing into stationary emergency vehicles.
So FSD is not ready for self-driving. Tesla EVs are also nowhere near ready for robotaxis.
Then FSD and robotaxis will be assigned zero values. Therefore, if you strip them out from Tesla's current price of USD338.59, its fair value is only USD77.88 and its market cap is worth USD250 billion.
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SKYWalkers : why?
why EVs need to have self driving?
it's not logical.
bullrider_21 OP SKYWalkers : The robotaxis are supposed to be safer than human drivers.
MonkeyGee : and it only take's 7% to protect that valve. buy Xpeng now!
SKYWalkers bullrider_21 OP : cost and benefits ratio is not worth it to transport humans, the claims, even if not car's fault, will bankrupt a company.
I have said before, it's not logical, not economical, and it's business wise suicidal.
it will only work for freight, cargo, parcel, food delivery. Food delivery might be least economical, but bulk mail and cargo haulage are the only economical use for autonomous vehicles, transporting humans will ultimately be a failed business venture.
bullrider_21 OP SKYWalkers : Musk claimed that costs are very low. The Cybercab will only sell for USD30,000. The price of a ride is the same as a bus fare. These are Musk's claims.
SKYWalkers bullrider_21 OP : not possible. that is only the car cost, there are server costs, maintenance costs, software costs, electricity cost, satellite costs, network bandwidth costs, probably a lot more that I missed out.
Have to use Waymo as a guide if need to dig in and investigate further.
bullrider_21 OP SKYWalkers : Tesla doesn't use lidars and radars, only cameras.
SKYWalkers bullrider_21 OP : if Uber, without it's own cab fleet, only recently profitable, Tesla, running it's own cab fleet, will only incur costs higher or on par with Uber
bullrider_21 OP SKYWalkers : I agree that costs are not as low as claimed.