Tesla's Robotaxi Launch – Last Chance Saloon?

(image: supplied)

"To say that Tesla's future is dependent on robotaxis is a bit of an understatement. Tesla has to completely decimate this industry or be left hung out to dry... this really is sink or swim for Tesla." – Technology commentator Will Lockett

Tesla has found itself in a bit of a pickle recently. It seems to have been beset by multiple plagues over the past year, which have given some automobile industry experts reason to predict its certain demise, or at least irrelevance, in the not-too-distant future.

Perhaps the worst of these has been its mercurial boss, Elon Musk, whose brief pivot into Trump politics alienated a significant percentage of his core base – affluent, environmentally aware liberals. Sales have fallen off a cliff in the US, Canada and Europe (up to 80% in some areas).

Plague number two has been the blistering ascendance of Chinese EVs and EV/hybrids, which have raced past Tesla in Europe and Asia, sporting cheaper and (in some analysts' eyes) better automobiles. Continuing Tesla's misery has been the over-hyped Cybertruck – a disappointment, at the very least. Multiple promises of new models priced for the middle class have also fallen flat.

Shimmering on a long-receding horizon (after multiple missed deadlines and undelivered promises dating back to 2019) has been the much-vaunted Robotaxi. A driverless vehicle using what has been dubbed 'FSD' (Full Self Driving) that would arrive to take control of a projected $1 trillion market by 2033, and propel Tesla away from its swarm of plagues and into pole position again, both making Tesla shareholders rich (or even richer) and re-establishing the somewhat tattered reputation of the world's most successful and famous tech entrepreneur.

Which leads us to two events last week. The unveiling of the Robotaxi in Austin, Texas (12 of them) which picked up and carried carefully selected passengers to local destinations, under the scrutiny of the press and accompanied by continuous video of each ride.

Then, on 28 June, a Tesla was delivered from the factory to a customer 30 miles away, traversing both city streets and highways. It was also carefully stage-managed – the route had been mapped and practised many times; there was little risk. At the conclusion of the car delivery, Musk stated: "To the best of our knowledge, this is the first fully autonomous drive with no people in the car or remotely operating the car on a public highway." This is patently not true. Competitor Waymo has been traversing highways for years.

So how did it go? The 12-car launch in geo-fenced areas of Austin went OK. Not great, but OK. One should ignore the rave reports of the passengers because being hand-selected raises the spectre of bias (some were Tesla shareholders). The ride videos were publicly available, so anyone with time on their hands could watch all of them, and many people did. There were problems, well documented now: lane violations, stopping in the middle of the road, missing a turn, exceeding the speed limit – that sort of thing.

No one got hurt, and it could be argued that these were only teething problems. But I suspect that the National Highway Traffic Safety Administration may see fit to slap a 'not yet ready' sticker on their report.

The delivery of the single car to the distant buyer under the glare of cameras was a stage show, a PR stunt; there was little to be learnt from it.

There are three hurdles that Tesla faces. The first is that, at least by some measures, Tesla is eight years behind Waymo, their major US competitor. Waymo has been offering riderless services since 2017 and is now in five states. That head start would be less important if Tesla had delivered a vastly superior product last week, but there is little evidence of that.

Then there is the Waymo philosophy to geo-fence their areas of operation, so that their cars can be trained for specific locations. Tesla's 'we drive anywhere' approach is much more ambitious, and much more difficult. Perhaps impossibly so.

Much more important is Musk's choice of sensor technology. Humans use their eyes, and to a much lesser extent their ears, when they drive. That is the route Musk decided to follow with 9 onboard video cameras and 360-degree vision, surmising that if we can do it, so can a bunch of reasonably inexpensive cameras with a more extensive field of vision.

Waymo, on the other hand, added two more sensor technologies – radar, which emits sound waves and analyses their echoes, and LiDAR, which does much the same with light. They use 13 cameras, five LiDAR units and six radar sensors. Much more expensive than mere video (about $12,000 per vehicle) and consequently much more environmentally and contextually aware – much more so than the relatively primitive two eyes of human beings.

Musk has been dismissive, even derisive, about the two extra sensor technologies. This has already cost him - this week Ford, who had been in conversation with Tesla about integrating their technology, decided to go with Waymo, a decision influenced by Waymo’s sensors,

And it is here that Tesla's future will be decided. If their decision to rely on video-only cameras provides a sustainably safe driverless ride (aided by their deep well of AI training data), Tesla might indeed walk away with this giant market, even with the drag of Musk's unpopularity in a certain demographic. On cost alone, Tesla will be superior to Waymo as a commercial proposition.

But if there are accidents, injuries and deaths that far exceed the three-sensor Waymo system, I do not see any way for the company to survive (at least as auto company) unless Musk backs down on his sensor obstinacy and changes course – an unlikely prospect, given his reputation.

As a late-breaking postscript, there is this: on 29 June, Elon Musk lashed out at the President's Big, Beautiful Bill. "The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country... utterly insane and destructive." I think we can be reasonably certain that Musk will not be getting much government support for his companies in the future, and certainly not for Tesla. The president does not take kindly to this sort of thing.

And then on July 1, Trump posted:

"Elon may get more subsidy than any human being in history, by far, and without subsidies, Elon would probably have to close up shop and head back home to South Africa. No more Rocket launches, Satellites, or Electric Car Production, and our Country would save a FORTUNE. Perhaps we should have DOGE take a good, hard, look at this? BIG MONEY TO BE SAVED!!!,"

Ouch.

This makes Tesla’s resurrection job even harder.

Steven Boykey Sidley is a professor of practice at JBS, University of Johannesburg and a partner at Bridge Capital and a columnist-at large at Daily Maverick. His new book "It's Mine: How the Crypto Industry is Redefining Ownership" is published by Maverick451 in SA and Legend Times Group in UK/EU, available now.