Tesla Robotaxi Services Update

Overview

Deutsche Bank analysts predict that Tesla (NASDAQ: TSLA) will launch its robotaxi services as early as 2025, with small-scale operations possibly starting in Texas next year.

Analysis

In a recent note, Deutsche Bank explained that this timeline follows Tesla's comments on its autonomous driving capabilities. The bank noted that deploying robotaxis without safety drivers is becoming the standard expectation for 2024, utilizing current models like the Model 3 and Model Y for fare-based rides through the Tesla app.

Market Focus

Texas is likely to be the first market for these services due to its favorable regulations, whereas launching in California may involve more stringent requirements, like having safety drivers. Arizona and Florida are also seen as potential markets for future expansion.

Full Self-Driving Software

The success of this initiative is tied to improvements in Tesla's Full Self-Driving (FSD) software. The upcoming FSD version 13 is projected to offer a "5-6x improvement" compared to the current version 12.5, and a significant "1,000x improvement" over earlier versions from January. The analysts believe that by mid-2025, FSD could potentially outperform human drivers.

Strategic Direction

Tesla's approach seems to be focused on maintaining full ownership of the robotaxi service value chain rather than collaborating with ride-hailing services. The analysts mentioned, "Management indicated it currently does not plan to partner with ride-hailing companies, aiming to capture the entire value chain for a robotaxi network."

Future Outlook

Deutsche Bank is optimistic about Tesla meeting regulatory challenges, predicting that the launch of the first "Cybercab" could occur in 2026, depending on production advancements. With Tesla making rapid progress, analysts foresee an increase in investor interest, noting that robotaxi expectations have significantly improved following Tesla's recent earnings report.