Tesla just produced its 10 millionth electric vehicle, but the milestone sits alongside two harder truths: its robotaxi push trails Waymo and Baidu, and its core car business keeps shrinking. Morgan Stanley pegs roughly 34% of Tesla's valuation to its core automotive and energy business, with the rest riding on robotaxi and Optimus bets that have yet to prove out.
Tesla investors have two concrete reasons to worry, even after the company produced its 10 millionth full-electric vehicle near the end of July. The robotaxi business that underpins much of Tesla's valuation is falling behind rivals, and the vehicle-manufacturing business that still generates its revenue keeps eroding.
Robotaxi bet trails Waymo and Baidu
Morgan Stanley analyst Adam Jonas breaks down Tesla's valuation into three pieces: roughly 34% from its core automotive and energy business, 41% from robotaxi and autonomous-driving hype, and 25% from its Optimus humanoid robot. The robotaxi business alone, which drives the largest slice, doesn't really exist yet.
Alphabet's Waymo has already logged more than 200 million fully autonomous, no-supervisor miles and generates roughly 500,000 weekly paid rides across major metro areas, while Baidu has passed 137 million fully driverless miles. Tesla, by contrast, has a cumulative 2.4 million paid robotaxi miles as of its second-quarter earnings, and growth between the first and second quarter was essentially flat. Tesla has announced expansion into Tampa, Orlando, and the broader Austin metro area, yet its active unsupervised driverless fleet is estimated at 20 to 40 vehicles.
The gap shows up in regulation, too. Amazon-owned Zoox was just granted permission by the National Highway Traffic Safety Administration to commercially deploy steering-wheel-free robotaxis at a rate of 2,500 vehicles annually for two years, for a total of 5,000 vehicles, and is poised to begin paid rides in Las Vegas. Tesla, meanwhile, hasn't outlined a clear approval timeline for its Cybercab. Its camera-only approach, without LiDAR or radar, and its older Hardware 3 chip, which lacks the processing power for the unsupervised full self-driving Tesla has promised, add further uncertainty to how fast it can scale.
Core vehicle business keeps shrinking
Tesla's manufacturing business is softening at the same time. The company once guided for roughly 50% annual growth in production and deliveries, but that growth stopped after deliveries peaked at 1.81 million in 2023. Deliveries then declined for two straight years, and 2026 remains uncertain.
The Model 3, launched in 2017, and the Model Y, launched in 2020, have never had a full redesign, relying instead on trim tweaks and software updates to sustain demand. The Cybertruck underperformed, the Model S and Model X were discontinued to free up factory space for robotics production, and the Tesla Semi remains years behind schedule despite impressing truckers who have used it. Price cuts, low-cost financing, and other promotional discounts aimed at propping up demand have pressured Tesla's profit margins as global EV competition intensifies.
A potential merger with SpaceX adds another layer of uncertainty investors are now weighing alongside the aging product lineup and the robotaxi race Tesla has yet to lead.
Source: Fool
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