Tesla's Robotaxi Launch Nears but is it Truly Driverless-Ready?

Electric vehicle behemoth Tesla TSLA is set to roll out its long-awaited robotaxi service to customers next month. Using Tesla’s in-house app, users will be able to book a driverless ride powered by the company’s Full Self-Driving (FSD) software.

But before the excitement fully kicks in, federal safety regulators are stepping in with questions. The National Highway Traffic Safety Administration (NHTSA) launched an investigation into Tesla’s FSD system, specifically how it performs in tricky driving conditions like rain, fog, and glare. The probe follows four reported crashes involving Tesla’s FSD (Supervised) software and is now focused on the upcoming “unsupervised” version that will power the robotaxi service.

Although Tesla has already tested a supervised version of the robotaxi with employees in Austin and San Francisco, where a driver still sits behind the wheel, the public rollout is likely to be fully autonomous, without a backup driver onboard.

NHTSA wants Tesla to prove its cars are truly ready to navigate public roads without a driver. The agency has sent Tesla a detailed list of questions and set a June 19 deadline for a response. Failure to comply could mean daily fines.

Musk is betting big on his autonomous vehicle vision. He believes robotaxis and self-driving tech could revolutionize transportation—and potentially boost the value of Tesla fivefold. But safety comes first. Time will tell if Tesla can meet the challenge and deliver on its bold promises.

TSLA’s Competitors in the Robotaxi Space

As Tesla’s robotaxi services for consumers are hitting the road next month, competitors like Alphabet GOOGL and Baidu BIDU already hold an early advantage in this race. While Tesla is yet to launch, these tech giants are well on their way to reaching scale. 

Alphabet’s Waymo is currently dominating the robotaxi market. With years of experience, extensive real-world testing and strategic partnerships, Waymo is already running commercial services in four U.S. cities, offering over 250,000 paid rides per week. Last year, Alphabet committed to investing $5 billion in Waymo over multiple years.

Baidu is expanding its robotaxi service, Apollo Go, which already operates in multiple Chinese cities, including a fleet of over 400 vehicles in Wuhan. Now, Baidu is preparing to test Apollo Go in Europe, starting in Switzerland by the end of 2025. The company is in talks with PostAuto for this launch and also plans to debut the service in Turkey.

TSLA’s Price Performance, Valuation and Estimates

Shares of Tesla have lost around 17% year to date compared with the industry’s decline of 19%.

From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 10.21, above the industry and its own 5-year average. It carries a Value Score of F.

The Zacks Consensus Estimate for TSLA’s earnings has been southbound over the past 60 days.

Tesla stock currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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