The unveiling of Tesla's self-driving car that functions as a robo-taxi left investors and analysts confused last week, as the vehicle is designed as a two-seat sports coupe — the exact opposite of a typical multi-passenger taxi. and baggage.
Tesla CEO Elon Musk unveiled the tiniest design of the prototype, dubbed the Cybercab, at a buzzy event in Los Angeles on Thursday night. The car is expected to go into production in 2026 and the billionaire said it will cost less than $30,000.
Musk played down expectations about how a two-seater self-driving taxi would meet the needs of families heading to restaurants or the airport, or whether he expected such vehicles to appeal to a niche clientele.
Investors scoffed at the ad's design and lack of financial details. On Friday, Tesla shares fell 9%. This Monday, shares rose about 1%.
“When we think of a taxi, we think of something that carries more than two people,” said Jonathan Elfallon, director of vehicle testing at the automotive site Edmunds.com. “To make it a two-seater is very disappointing.”
Tesla did not comment on the matter.
Experts say driverless taxis will do better when they offer more space, taller designs and sliding doors. Musk presented a vehicle at the event that could seat 20 people and had futuristic styling, but did not say when the model, called the Cybervan, would be available.
The market for two-door robo-taxis will be very limited, said Sandeep Rao, senior researcher at Leverage Shares, an investment management firm with about $1 billion in assets, including Tesla.
Excluding SUVs and pickup trucks, two-door vehicles account for just 2% of U.S. car sales, according to data from analytics firm JD Power.
Musk has said he wants to make autonomous taxis cheaper than public transportation, and predicts that Cybercab will cost 20 cents per mile over time.
But he didn't say how quickly Tesla could mass-produce the Cybercabs and win regulatory approvals, or how Alphabet's Waymo, which already operates robotaxis in some U.S. cities, could win.
Also in the background were explanations of the impact of these vehicles on congested traffic in big cities.
Waymo has about 700 Jaguar Land Rover cars that seat four passengers, the same number of seats as Amazon's Zoox robots.
Former Waymo CEO John Krafcik said Tesla's design is “more fun than serious” and that the two-door configuration presents challenges for elderly and disabled passengers.
“More playful than serious”
Robotaxis' delivery and capture of the still nascent and tightly regulated market will be fundamental for Tesla.
This year, as demand for electric vehicles dwindles worldwide, Musk abandoned Tesla's plans to build a smaller, cheaper car and shifted the company's focus to developing autonomous driving technology. The driverless taxi business could boost Tesla's market value from $700 billion to $5 trillion.
“Two-seater vehicles have been proposed as passenger vehicles for decades. They haven't taken off yet,” said Sam Fiorani, vice president of research firm AutoForecast Solutions. Tesla will eventually have to produce larger autonomous models, he said.
Blake Anderson, a senior investment analyst at Tesla investor Carson Group, said the two-seat design doesn't make sense if the CyberCab is a low-cost mass-market model to broaden the automaker's appeal.
“It's a way to get something to market sooner,” he said.
