Gary Black, managing partner at Future Fund LLC, has expressed doubts about the potential of Tesla Inc.'s (NASDAQ:TSLA) proposed autonomous "Cybercab" service to outperform Uber Technologies Inc. (NYSE:UBER).

What Happened: On Sunday, a social media user on X, formerly Twitter, argued that Tesla's Cybercab could significantly undercut Uber's cost per mile by eliminating the need for a driver.

"Uber has a bigger network in the beginning but no moat is big enough to defend the $1/mile diff in pricing," the user said.

However, Black disagreed with this view, stating that Tesla's autonomous vehicles are not yet capable of performing with near-perfect reliability.

He estimated that Tesla's autonomous driving systems are currently at 97% efficacy, implying that human intervention is still required for the remaining 3% of driving situations.

"Many $UBER bears seem to forget that $TSLA Cybercab can't drive at 99.99% efficacy (more like 97%), so can't eliminate the driver cost. Maybe by 2027," he stated.

Why It Matters: Tesla's Cybercab, unveiled at the "We, Robot" event last week, was touted as a cost-competitive alternative to existing ride-hailing services.

The autonomous vehicle, priced under $30,000, left event participants awestruck with its butterfly wings that opened upwards.

Despite the impressive design and cost advantage, analysts expressed concerns about the production timeline, hinting at a start date of sometime in 2026 or 2027 at the least.

Meanwhile, Uber has been making strides in its transition to electric vehicles. The company has pledged $800 million to aid its drivers in transitioning to EVs by 2040 and is launching an AI assistant to help with EV-related queries.

Uber's CEO Dara Khosrowshahi has also announced measures to ramp up the electrification of its fleet.

In September 2024, Uber and Waymo by Google parent Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) also announced a partnership to bring autonomous ride-hailing to Austin and Atlanta.

Waymo is an autonomous driving technology firm that at the time had already provided more than two million rider-only trips across 13+ states in the U.S.

Following the CyberCab and RoboVan reveal, the consensus among Uber analysts is that while Tesla's ambitions in the autonomous vehicle space are certainly bold, they pose little immediate competitive threat.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.