Tesla Inc. made a modest but pivotal move in its bid to dominate the autonomous vehicle industry by launching its robotaxi service in Austin, Texas on Sunday.
The pilot program, involving up to 20 Tesla Model Y electric vehicles, marks the automaker’s first public deployment of its fully driverless ride-hailing service—a concept long touted by Chief Executive Elon Musk as the company’s next transformative frontier.
There are no human drivers in these vehicles. Instead, they are steered by Tesla’s Full Self-Driving (FSD) software, the company’s most advanced iteration of its driver-assistance technology.
The ride cost? A flat fee of $4.20, according to a post by Musk on X.
Super congratulations to the @Tesla_AI software & chip design teams on a successful @Robotaxi launch!!
Culmination of a decade of hard work.
Both the AI chip and software teams were built from scratch within Tesla.
0
Reply
Copy link
The Robotaxi gets positive early reviews
The Model Ys, retrofitted to operate without a driver, are being monitored remotely by Tesla staff who can intervene in complex traffic situations.
Each vehicle also features microphones to detect emergency vehicle sirens—a nod to real-world operating challenges.
Tesla’s first robotaxi rides were confined to a small section of its hometown, Austin, with an employee present in each car to monitor operations.
The company selected a favorable group of early riders, including investors and social media influencers, some of whom live-streamed their experiences.
In one such video, Herbert Ong, who runs a Tesla fan account, expressed amazement at the vehicle’s speed and its autonomous parking ability.
Another user, posting under the handle @BLKMDL3 on X, said the ride felt “smoother than a human driver.”
Tesla investor Sawyer Merritt described the experience simply as “awesome.”
Tesla has indicated that it plans to expand robotaxi operations to cities like San Francisco, Los Angeles and San Antonio.
Musk claims the company will have hundreds of thousands of fully autonomous Teslas on US roads by the end of 2026.
My thoughts after 3 Robotaxi rides:
– Very smooth and comfortable. Similar to existing Tesla cars with FSD.
– App UI is intuitive but can use a couple upgrades (placing a pin anywhere, change trip while in car)
– It is completely and totally surreal.
As a Tesla owner and
11.8K
Reply
Copy link
Why is the Robotaxi’s success important for Tesla and the TSLA stock?
The move into autonomous driving comes at a time when Tesla’s core car business is facing mounting pressure.
Despite generating $98 billion in revenue last year, three-quarters of which came from vehicle sales, the company is contending with increased competition and a dated lineup.
There’s also been political fallout due to Musk’s association with the Trump administration, which some buyers have criticized.
Against this backdrop, Tesla’s robotaxi ambitions represent more than just a new product—they are now central to the company’s long-term valuation and growth narrative.
“Robotaxis are critical to the Tesla investment case,” Tom Narayan, an analyst with RBC Capital Markets, said in a note.
Narayan estimates that roughly 60% of Tesla’s valuation is tied to its self-driving efforts.
He believes the technology could add between $5 trillion and $10 trillion to Tesla’s market capitalization, which currently stands around $1 trillion.
ARK Invest, led by Cathie Wood, has projected that autonomous ride-hailing could be a $951 billion revenue stream for Tesla by 2029, accounting for 90% of its earnings.
Analysts’ response to the Robotaxi and its future prospects
Despite the promise, investor sentiment remains divided.
“Tesla’s successful robotaxi launch in Austin, Texas on Sunday opens up its AI story,” Wedbush analysts say in a research note.
After trying out the service, they said the robotaxi was able to maneuver “masterfully” with patience and safety.
“These Robotaxis exceeded our expectations and offered a seamless and personalized travel experience that has lit the spark for autonomous driving,” they said, maintaining the brokerage’s outperform rating on Tesla with a target price at $500- a more than 55% upside to its current share price of $322.16.
However, some early Tesla bulls are growing wary.
Gary Black, a longtime supporter, recently disclosed that his Future Fund has sold its remaining Tesla shares, citing misalignment between the company’s lofty valuation and its actual vehicle sales.
He also doesn’t expect the robotaxi product to do much to boost the company’s value.
“I don’t see the upside at this point, but I see plenty of downside,” he said.
Skeptics point to the uncertain timeline and regulatory barriers involved in scaling the service.
“It could take years or decades,” said Philip Koopman, a computer-engineering professor at Carnegie Mellon University who specializes in autonomous vehicle safety.
Former Tesla president Jon McNeill, now on the board of General Motors, questioned the overall market potential.
“It’s hard to square how people are arriving at a $1 trillion opportunity,” he said, though he acknowledged the possibility of multiple players succeeding in the space.
Outlook for TSLA stock
Tesla shares remain volatile, currently trading at $322.16—nearly 170 times estimated 2025 earnings.
All of this points to one key takeaway: investors are betting that AI will become a major driver of Tesla’s future earnings.
“We view this autonomous [driving] chapter as one of the most important for [CEO Elon] Musk and Tesla in its history as a company,” wrote Wedbush analyst Dan Ives on Friday.
The AI future at Tesla is worth $1 trillion to the valuation alone over the next few years.
Ives is a Tesla bull, rating shares at Buy with a price target at a Street-high of $500.
On the other hand, Guggenheim analyst Ronald Jewsikow holds a sell rating and a $175 target, warning of risks like regulatory delays, steep capital needs, and the technological roadblocks to widespread deployment.
“Even with our more-balanced view….we still see a nearly $2 trillion enterprise value for robo-taxis in 2040,” adding that’s worth almost $100 a share, discounted back to today.
Jewsikow doesn’t add that into Tesla’s base valuation, however, because it’s a 2040 number and, of course, there are those risks.
Market technician Katie Stockton of Fairlead Strategies noted that Tesla shares have strong support around $300, with resistance at the $370 to $380 range.
A fall below $224 would be a more bearish signal. Stockton emphasized that these are technical indicators, not fundamental assessments of the company’s business.
A regulatory puzzle still unsolved
For Tesla, regulation remains a stubborn obstacle.
Autonomous vehicles are currently regulated by individual states and, in some cases, municipalities.
Musk has repeatedly urged the US government to implement federal-level rules, arguing that a patchwork of local laws hinders Tesla’s ability to scale the FSD software uniformly.
As things stand, each city or state expansion will require negotiation and approval, likely slowing down the aggressive growth timeline Musk envisions.
The post Tesla’s $4.20 robotaxi ride revives AI bull case, but analysts warn of long road ahead appeared first on Invezz