Tesla Cybercab launch: a new era in autonomous urban mobility

Overview

Tesla unveiled its self-driving robotaxi at the "We, Robot" event, where it also announced advancements towards full autonomous driving capabilities from its current Full-Self Driving (FSD) technology. The robotaxi, rumoured to be named ‘Cybercab’, was presented as a two-door, two-seater vehicle prototype without a steering wheel or pedals.

The robotaxi has generated considerable excitement over the years due to its potential massive price advantage over petrol vehicles—thanks to lower operating costs of electric vehicles (EVs) and savings on manpower due to its driverless nature. These factors may lead to significant cost savings for consumers, though safety and reliability are critical concerns that were addressed.

Key areas of focus

• Timeline of roll-out

While the Cybercab is not expected to be deployed immediately, the timeline of its commercial roll-out will be a central focus. Predictions have ranged from as early as late 2024 to as far out as 2027 (or even 2030), so clear guidance will help to resolve these speculations.

An accelerated roll-out could benefit Tesla’s share price, as the company can diversify its business quickly into autonomous ride-hailing as an additional revenue stream. A quicker roll-out would also secure its position as the market leader in autonomous vehicles by giving competitors little time to catch up, while allowing for a larger scale of driving data collection to enhance its Full Self-Driving (FSD) software.

A late-2026 roll-out timeline may still be acceptable, considering that it took approximately four years from the Cybertruck’s unveiling in 2019 to its initial delivery by the end of 2023.

• Costs of production involved

Market participants may also be interested in the costs involved in rolling out the robotaxi on a large scale, with investments likely needed in production lines, development expenses, manpower shifts or regulatory costs. Tesla laid off more than 10% of its global workforce in April this year, so the introduction of a new product will cast doubts over its production plans.

Tesla’s profit margins have faced some pressures lately. In Q2 2024, its adjusted operating margin contracted for the fourth straight quarter to its lowest in three years (14.4% versus 18.7% a year ago), so any further impact on margins will remain under scrutiny.

• Additional details

More clarity on its business models, e.g. new app platforms, will also be sought, with Elon Musk previously mentioning the possibility of allowing Tesla owners to run their cars as robotaxis when not in use. The company has also previously indicated plans for low-cost EV models, alongside the production of its in-house battery to power its products, so any information on these will be welcomed as well.

Stocks to watch

• Tesla

Year-to-date, Tesla’s share price is still down 3.0%, so the event may determine if investor confidence can be boosted to drive some catch-up with its Magnificent Seven peers. The risk of disappointment may arise from delays in rolling out the robotaxi fleet or if progress in achieving full autonomous driving capabilities fails to impress.

Technically, a near-term ascending channel is in place, with the share price now seeking to form a higher low at the lower trendline support at the US$239.54 level. Its daily relative strength index (RSI) is also back at its mid-line, which may require some defending.

Trading in line with the channel may see the share price move to retest a key resistance at the US$266.12 level, which prices failed to break in December 2023 and July 2024. Any breakdown of the channel may see a support confluence at the US$212.77 level.

Tesla daily chart

• Uber and Luft

Uber and Lyft have indeed established themselves as significant players in the ride-hailing industry, with Uber dominating globally with a 25% market share in 2022 and Lyft holding an 8% share. Their current business models rely heavily on human drivers, but the potential shift towards fully autonomous robotaxis, like those Tesla plans to introduce, could represent a pivotal change.

If Tesla's robotaxis roll out quickly and efficiently, this could initially be perceived as a competitive threat to Uber and Lyft. However, these companies could also see it as an opportunity to evolve by potentially partnering with Tesla to integrate autonomous vehicles into their existing service frameworks. Such a partnership could leverage their established reputations for reliability and their vast user bases.

In terms of stock market performance, Uber's share price has been following a near-term rising wedge, suggesting a healthy upward trend. Its daily Relative Strength Index (RSI) indicates that buying interest has been robust, rebounding from the mid-line and pointing towards continued buyer control. This resilience suggests that any immediate sell-off in Uber’s shares, potentially due to market reactions to Tesla’s advancements, might be seen as an overreaction.

The current technical setup points to the US$74.82 level as a key support area along the wedge’s trendline. Should the positive momentum continue, the next resistance to watch is around the US$81.52 mark, which corresponds to the highs of 2024. This dynamic could represent an opportunity for investors to capitalize on fluctuations driven by market sentiment and strategic industry developments.

Uber daily chart

The landscape of the automotive industry is rapidly evolving with the advent of technologies like autonomous driving, significantly impacting traditional automakers as well as tech companies. Here's how the introduction of robotaxis might affect various sectors within the industry:

• Traditional Automakers

For companies like Ford and GM, the rise of fully autonomous robotaxis presents both a challenge and an opportunity. These traditional car manufacturers may face pressure as consumer preferences could shift towards the cost-effective and technologically advanced robotaxis, especially if they prove to be safer and more efficient. However, it's likely to be some time before robotaxis are widely adopted, giving these manufacturers a window to adapt and innovate. A successful unveiling of Tesla's robotaxi could lead to a temporary dip in the stock prices of these traditional automakers due to a knee-jerk market reaction, reflecting fears of future competition.

• Alphabet (Waymo)

Alphabet's Waymo has been pioneering the development of autonomous driving technology, positioning itself as a leader in the robotaxi field. A successful launch of Tesla's robotaxi could be seen as a direct competition to Waymo. However, given that Waymo constitutes a relatively small portion of Alphabet's overall business, any drastic market reaction might be short-lived. Investors and stakeholders in Alphabet might initially react to perceived threats from Tesla's innovations, but the broader impact on Alphabet's stock could stabilize as the market absorbs these developments.

• Nvidia

Nvidia stands to benefit from advancements in autonomous driving technology, particularly if Tesla’s Full Self-Driving (FSD) system relies on Nvidia's hardware. As Tesla showcases further enhancements in FSD at their event, it could underscore the demand for Nvidia's chips, bolstering Nvidia’s position in the market. This scenario highlights Nvidia's pivotal role in the supply chain of autonomous vehicle technology, potentially leading to increased stock stability and growth as the industry continues to embrace more advanced autonomous capabilities.

Overall, the dynamics within the automotive and technology sectors are set to change with developments in autonomous driving. While there might be immediate market reactions to Tesla's upcoming event, the long-term implications will hinge on how quickly and effectively companies can adapt to incorporate or compete with new autonomous technologies.