Tesla traders develop cautious of Elon Musk robotaxi guarantees

At Tesla, car gross sales are slumping, earnings are thinning and income from regulatory credit score gross sales are poised to dry up attributable to Republican-led policy changes.

Previously, CEO Elon Musk’s futuristic guarantees have satisfied traders to look previous prime and backside line numbers.

Not now.

Following one other pretty dismal earnings report this week, Musk advised analysts on the decision that Tesla’s electrical autos will quickly develop into driverless, earning profits for homeowners whereas they sleep. He additionally stated Tesla’s robotaxi service, which the corporate not too long ago began testing in a restricted capability in Austin, Texas, will broaden to different states, with a aim of with the ability to attain half the U.S. inhabitants by year-end, “assuming now we have regulatory approvals.”

It did not matter.

Tesla shares plummeted 8% on Thursday as traders targeted on the fast challenges going through the corporate, together with the speedy rise of lower-cost EV rivals, notably in China, and a political backlash towards Musk that harmed Tesla’s model within the U.S. and Europe.

Automotive gross sales declined 16% year-over-year within the second quarter for the EV maker, with weak sales numbers continuing in Europe and California. Musk stated there could possibly be a “few tough quarters” forward due to the EV credit expiring and President Donald Trump’s tariffs.

The inventory bounced again some on Friday, gaining 3.5%, however nonetheless ended the week down and has now fallen 22% this 12 months, the worst efficiency amongst tech’s megacaps. The Nasdaq rose 1% for the week and is up greater than 9% in 2025, closing at a file on Friday.

“Look, we love robotaxis. And robots,” wrote analysts at Canaccord Genuity, who suggest shopping for Tesla’s inventory, in a be aware after the earnings report. “Over time, Tesla is effectively positioned to learn from these future-forward alternatives.”

The analysts, nevertheless, stated that they are targeted on the revenue and loss assertion, writing: “However we love development too, within the right here and now. We want the P&L dynamics to show.”

Analysts at Jefferies described the earnings replace as “a bit uninteresting.” And Goldman Sachs stated Tesla’s robotaxi effort is “nonetheless small” with restricted technical information factors.

Tesla did not reply to a request for remark.

Musk, who has beforehand called himself “pathologically optimistic,” has been capable of sway shareholders and ship the inventory hovering at occasions with guarantees of self-driving vehicles, humanoid robots and more affordable EVs.

However after a decade of missed self-imposed deadlines on autonomous driving, Wall Road is watching Tesla fall behind Alphabet’s Waymo within the U.S. and Baidu’s Apollo Go in China.

In Tesla’s shareholder deck, the corporate stated the second quarter marked the beginning of its “transition from main the electrical car and renewable power industries to additionally turning into a frontrunner in AI, robotics and associated providers.” The corporate did not provide any new steering for development or earnings for the 12 months forward.

Business Insider reported on Friday that Tesla advised workers its robotaxi service might launch within the San Francisco Bay Space as quickly as this weekend.

However Tesla hasn’t utilized for permits that will be required to run a driverless ridehailing service in California, CNBC confirmed. The corporate would first want authorizations from the state’s Division of Motor Autos and the California Public Utilities Fee (CPUC).

The CPUC advised CNBC on Friday, that beneath current permits, Tesla can solely function a human-driven chartered car service, not carry passengers in robotaxis.

On the earnings name, Musk and different Tesla execs claimed the corporate was engaged on regulatory approvals to launch in Nevada, Arizona, Florida and different markets, along with San Francisco, however provided no particulars about what could be required.

Inside Austin, the corporate stated its robotaxi service had pushed 7,000 miles, and that Tesla has been proscribing its robotaxis’ to roads with a velocity restrict of 40 miles per hour. The Austin service includes a small fleet of about 10 to twenty Mannequin Y autos outfitted with the corporate’s incident self-driving techniques.

The Tesla robotaxis depend on distant supervision by staff in a customer support middle, and a human security supervisor within the entrance passenger seat, able to intervene if wanted.

Evaluate that to what Alphabet stated on its second-quarter earnings name the identical day as Tesla’s outcomes.

“The Waymo Driver has now autonomously pushed over 100 million miles on public roads, and the workforce is testing throughout greater than 10 cities this 12 months, together with New York and Philadelphia,” Alphabet stated. In the meantime, Waymo has develop into important sufficient that Alphabet added a class to its Different Bets income description in its incident quarterly filing.

“Revenues from Different Bets are generated primarily from the sale of autonomous transportation providers, healthcare-related providers and web providers,” the submitting stated. The Different Bets phase stays comparatively small, with income coming in at $373 million within the quarter. 

No matter investor skepticism, Musk is extra bullish than ever.

On Friday, the world’s richest particular person posted on his social community X that he thinks Tesla will sometime be value $20 trillion. On the earnings name earlier within the week, he stated that in the case of AI for vehicles and robots, “Tesla is definitely significantly better than Google by far” and “significantly better than anybody at actual world AI.”

CORRECTION: The Waymo Driver has now autonomously pushed over 100 million miles on public roads, in line with Alphabet. A earlier model misstated the variety of miles.

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