Elon Musk's imminent rollout of Tesla's "robotaxi" service could pose a threat to Uber as the two companies attempts to incorporate driverless vehicles into their operations and compete for a share of this revolutionary new market.
"We continue to believe Tesla Robotaxi serves as a long-term threat to Uber's business model," analysts at Wedbush Securities wrote in a note on Thursday.
They referred to a new Bloomberg report that, citing anonymous sources familiar with the plans, said Tesla intends to launch its robotaxi service on June 12.
Newsweek has reached out to Tesla via email for comment. Uber directed Newsweek to previous comments made by its executive on the opportunities for the company in the autonomous vehicle space.
Why It Matters
Tesla and Uber have been racing to test and implement autonomous driving, which has become a central element of both companies' long-term growth strategies and value propositions to investors. Uber hopes to incorporate it into its ride-sharing and delivery services, while Tesla intends on making driverless cars available to customers in addition to a fully autonomous robotaxi network.
What To Know
In preparation for the robotaxi launch, Bloomberg reported that Tesla has been testing its self-driving Model Y in Austin, Texas. Musk confirmed self-driving tests in a post to his X, formerly Twitter, on Thursday.
"For the past several days, Tesla has been testing self-driving Model Y cars (no one in driver's seat) on Austin public streets with no incidents," he wrote. "A month ahead of schedule. Next month, first self-delivery from factory to customer."
Uber, meanwhile, has begun offering autonomous riding experiences through its partnership with Waymo, the self-driving vehicle subsidiary of Google parent Alphabet. The company launched the initiative in a 37-mile area of Austin in March and said it plans to expand to Atlanta in the near future.
However, both companies' autonomous vehicle tests have encountered scrutiny on safety grounds as well regulatory hurdles, and experts told Newsweek a full nationwide rollout may be premature given questions surrounding the safety and practicality of full-self-driving (FSD) vehicles.
"There are significant safety concerns with wireless data connectivity and situational awareness with a remote driver," said Phil Koopman, professor at Carnegie Mellon University's Department of Electrical and Computer Engineering.
"If the data connection drops at just the wrong time when the remote driver needs to intervene for safety, we could see a crash," Koopman told Newsweek. "Since Tesla is not being forthcoming with details of how their remote driver arrangement works, we will just have to wait and see how this turns out."
He added that it remains unclear how FSD cars would be able to deal with an "edge case"—uncommon situations that fall outside the common patterns an autonomous vehicle has been trained to deal with.
While a full rollout may be imminent, Americans also remain skeptical of the promise of autonomous vehicles. In a recent poll of 8,000 U.S. consumers by market research firm Electric Vehicle Intelligence Report, 71 percent said they would be unwilling to ride in a Tesla robotaxi, with 43 percent saying that robotaxis should be illegal.
What People Are Saying
Jack Stilgoe, professor of Science and Technology Studies at University College London, told Newsweek: "Tesla has been engaged in a giant experiment in automotive autonomy for more than a decade. There is still a lot of experimenting to be done, and the public and policymakers should want this to be done as responsibly as possible. The concern is that Tesla's haste to move on to the next phase of their experiment might prompt the company to be reckless.
"Getting a robotaxi to work doesn't just mean getting the software and hardware up to scratch at a level of reliability way above what Tesla has demonstrated so far. It also means doing all of the boring stuff—teleoperation, customer services, parking lots—that make a service work.
"And all of this requires the support of regulators, cities, infrastructure planners, a trusting and willing user base and supportive citizens in the places where the vehicles operate."
Bryant Walker Smith, a legal scholar specializing in autonomous vehicles and emerging transport technologies, told Newsweek: "Tesla has never demonstrated a system capable of automated driving. Any June 'launch' of such a system will necessarily be exceptionally limited: simple environments, slow speeds, and supervised operations."
Phil Koopman of Carnegie Mellon University told Newsweek: "Tesla FSD is a very long way from being able to act like a robotaxi everywhere. There are still serious safety concerns with its behaviors. With a robotaxi, there will be no in-vehicle driver to blame for crashes. Tesla needs to get this right, and the technology is still a work in progress.
"It seems that Tesla is applying significant effort to polish FSD up for a small initial deployment involving a few cars in a limited area. It is good that they are starting small. Hopefully they will be attentive to fixing any problems before increasing the size of the operation."
Uber CEO Dara Khosrowshahi, in a statement earlier this year: "Naturally, investors are debating whether AVs pose a risk or present a massive opportunity for Uber. Based on our deep engagement with AV technology developers, auto [Original Equipment Manufacturers] and other experts and technologists in the ecosystem, I am more confident than ever that Uber is uniquely positioned to capture the $1 trillion+ opportunity that autonomy will unlock in the U.S. alone."
Uber's head of strategic finance, Balaji Krishnamurthy, on X: "We believe AV can open up a $1T+ [Total Addressable Market] for Uber in the US alone — but while AV tech is advancing, commercialization will happen much more slowly. Multiple elements still need to come together: A consistently super-human safety record — human-level safety is simply not good enough; Enabling regulations — which are still nascent in most markets; A cost-effective, scaled hardware platform — most OEMs not able to produce at the right cost or volumes; Excellent on-the-ground operations — Uber's wheelhouse."
Tesla CEO Elon Musk, during an earnings call in April: "I remain extremely optimistic about the future of the company. The future of the company is fundamentally based on large-scale autonomous cars and large-scale—being large volume—vast numbers of autonomous humanoid robots.
"The value of a company that makes truly useful autonomous humanoid robots and autonomous useful vehicles at scale, at low cost—which is what Tesla is going to do—is staggering. I continue to believe that Tesla, with excellent execution, will be the most valuable company in the world by far."
What Happens Next
Wedbush Securities analysts believe autonomous vehicles and robotics are key to Tesla's growth, estimating this month that these opportunities are "worth at least $1 trillion alone for Tesla." As a result of the imminent Austin launch, they increased their price target for Tesla shares to $500 from $350.