Don’t expect to see Tesla robotaxis everywhere just yet

00:00 Speaker A

Tesla set to roll out their robo taxis this weekend and our next guest today says a successful launch is essential for Tesla to validate the company’s long-term pivot toward autonomous mobility. For more let’s welcome in our Stephen Jengaro, Stifel Next Gen transport analyst. Stephen, it’s good to see you. So, Tesla’s robo taxi service rolling out this weekend. There in Texas, Stephen. What what do you expect to see and hear and how excited should investors be for this moment?

01:20 Stephen Jengaro

Yeah, hi Josh, and thanks for having me again. So, when we think about Tesla in general, right? The robo taxi initiative and the full self-driving initiative are critical long-term value drivers of the company. We’ve talked a lot about that in research notes. When we think about this weekend, I mean, we think this is going to be a slow process, right? This morning you already had some senators and some some folks I think that were local, local representatives down in Texas wanting to sort of delay the launch until more safety can be checked. But, you know, this is going to be a slow process. You’re probably going to see expected to see 10 or 20 vehicles on the road, Model Ys that are being very closely monitored uh by Tesla. So, this is, you know, a very slow process, but it is obviously, you know, the first step in something which can be much, much larger over time.

03:17 Speaker A

And in terms of how how expands from here, Stephen. Here was Dan Ives or Wedbush, we know, Dan Bull of Bulls on on Tesla, told his clients said, he said, while the Austin launch will start off small with roughly 20 Model Y vehicles, he says, it’s our view Tesla will launch and scale its robo taxi service to roughly 25 cities in the US over the next year. What do you make of that?

04:14 Stephen Jengaro

Well, it’s I think the first thing that we have to think about, Josh, is safety, right? I think one of the risks to to the launch is obviously the safety of the autonomous driving system. And, you know, if I get in an accident on the on the way to work on Monday, nobody’s going to know or care. If a robo taxi, you know, bumps into a fire hydrant, it’s going to be in every news feed probably in the world, right? So there has to be a really careful focus on safety. So, when we think about the next steps from here, I do think you’re going to see it roll out, you know, over over the next two to three quarters in in multiple cities in the US. You know, I think it’s going to be measured. I think it’s going to be a slow process. I mean, when when we think about the importance of it to Tesla, I don’t care that much if it’s in three cities, or five cities, or seven cities, you know, by December 31st. What I care is that if there’s a clean launch, it goes smoothly, and the safety record is extremely high. And I think I think Tesla understands that. So, while we do build in these significant long-term upside potentials for the company, and the robo taxi initiatives are obviously a big part of our valuation. Uh I think the near term, you know, the focus on safety is more important than how many vehicles are actually out there.