The Upcoming "Robotaxi Day" Could Make Or Break Tesla
The Upcoming "Robotaxi Day" Could Make Or Break Tesla
Will Tesla make the obvious decision?
Let’s focus on the potential uplift. I’m not the only person who thinks Robotaxi Day could be pivotal for Tesla. Wedbush analysts believe the event alone could push Tesla stocks towards a $1 trillion market cap! They believe that the progress Tesla has made with their FSD driver-assist system, combined with a dedicated robotaxi platform, could drive a stock purchase flurry as people and institutions predict Tesla could be the first to break the robotaxi market, giving them a serious increase in revenue.
If you are a regular reader of mine, you might be surprised that I kind of agree with Wedbush. I think that if Musk’s plans are solid, there is a legitimate reason for Tesla’s stock price to jump significantly after Robotaxi Day. But I doubt it will break $1 trillion. Wedbush owns quite a lot of Tesla stock, so it’s understandable why they would overexaggerate here.
If Musk’s plans are solid, it could be the making of Tesla. While Mercedes and others are ahead of Tesla in terms of self-driving cars, that is partly due to them having more superior and comprehensive sensors. However, Tesla is much better at developing AI and gathering real-world data (which is necessary to train the AIs) than any other automaker. It’s far easier for Tesla to solve its shortcomings by adopting better sensor technology than for Mercedes and other manufacturers to solve their slow AI development and lack of data.
As such, if the announced plans on “Robotaxi Day” solve Tesla’s self-driving Achilles heel, it stands to reason that it is highly likely they can develop road-legal fully autonomous cars and robotaxis years before anyone else. As long as these vehicles don’t cost a ridiculous amount, this could massively increase their sales and add a huge amount to their revenue through Tesla-owned robotaxis. Musk’s bet on self-driving will have paid off, and the massively impaired development of the rest of the company will have been worth it.
But, there is also a vast downside to this bet.
For example, when news of the Model 2’s axing and restructuring of Tesla to focus on self-driving AI development hit the media, Tesla’s stock price plummeted. Why? Even institutional investors are becoming highly sceptical of Musk’s plans to make self-driving cars a core part of Tesla’s business plans, which is entirely understandable.
Firstly, there is Tesla’s sensor problem. Back in 2021, against his own engineer’s advice, Musk decided to remove every self-driving sensor from Teslas, apart from the cameras, and switched FSD to “vision only.” These engineers would later report to the media that FSD become noticeably less safe, is dangerous, and should not be sold to the public. Why? Well, every other self-driving car uses an entire suite of overlapping sensors, such as Lidar, 4D radar, ultrasonic sensors and cameras. This way, there is redundancy in the sensing system. If the computer vision AI reads the camera data wrong, it can be checked and verified against the other sensors and vice versa. Similarly, other sensors can fill in the gaps if conditions render a sensor type inoperable. What’s more, Self-driving AIs need less development and training if they have this higher quality and higher fidelity data to train on and use in the real world.
In other words, Musk’s decision to go “vision only” made FSD inherently and deeply flawed.
Those engineers were later proven correct. Numerous fatal crashes have been caused by Tesla’s FSD since 2021. So much so that it has sparked an investigation by the DoJ into the system’s safety. “People familiar with the matter” recently told Reuters that DoJ prosecutors are currently investigating whether Tesla committed securities fraud by deceiving investors or wire fraud by misleading customers about how capable FSD is. This is likely only the first step of their legal action against Tesla, as there is a possibility of more severe charges, such as manslaughter and negligence, being levied against Musk and Tesla later down the line.
There is also a serious issue with AI development. As I have covered before, advanced AIs are starting to reach the point of diminishing returns. Basically, as these AIs get more accurate, the energy and data requirements to make them more accurate are increasing exponentially. For example, a study from the University of Massachusetts Amherst looked at the computation and energy costs associated with improving an image recognition AI performance to over 95% accuracy. They found that training such a model would cost $100 billion and produce as much carbon emissions as New York City does in a month. Bearing in mind that this is for an AI that still gets it catastrophically wrong 5% of the time. The study also highlighted that increasing accuracy to 99% would take exponentially more cost and carbon emissions.
As Tesla’s self-driving AI is basically a highly complex image recognition AI, it needs nearly 100% accuracy in order to meet safety standards. Tesla can gather enough data for this easily, but the energy requirements for training this AI could be in the hundreds of billions of dollars! Moreover, even after all of that, false positives or “AI hallucinations” might not go away, as many studies suggest training AI on larger datasets can’t fully tackle this problem. This means that a 100% accurate AI might not actually be possible with today’s technology.
This is why every self-driving company on the planet does the exact opposite of Tesla, loading their vehicles with as many sensors as possible. That way, the AI doesn’t have to be as accurate to get the same level of safety.
You see, this is the crux of Robotaxi Day. If Musk announces that the robotaxi will use other sensors such as Lidar, then there is reason to believe they can actually build and deliver a legal, safe and functional robotaxi. In fact, there is reason to believe this is the case, as Tesla-owned Model Ys were recently pictured testing Lidar sensors. However, if Musk announces that it will continue to only use cameras, it’s almost certain the Robotaxi will be an unsafe dud. Only the future can tell whether investors will realise this on Robotaxi Day or when the vehicle is finally delivered.
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Sources: Investing.com, Will Lockett, Planet Earth & Beyond, Planet Earth & Beyond, Planet Earth & Beyond, Yahoo, Notebook Check