Robotaxi fleet: If Tesla builds it, will the consumers come?

Tesla (NASDAQ:TSLA) is only two days away from showing off its next-gen vehicle and updating on its vision for a robotaxi fleet. Investors will have their eyes on the form of the autonomous vehicle, as well as the expected timeline.

Truist Securities analyst William Stein expects that Tesla (TSLA) will distinguish the new vehicle from its existing lineup by showing a prototype that is smaller, loaded with new technology, and able to be produced on a new manufacturing architecture. A lower price point for the vehicle could enable Tesla (TSLA) to address a much larger total addressable market than the current vehicle lineup does. The firm does not anticipate that Tesla (TSLA) will show a new vehicle ready for 2025 release, but thinks that shares could be jolted if Tesla (TSLA) says its emerging unboxed architecture could be used by late 2025 in preparation for a 2026 release.

Ahead of Tesla’s (TSLA) event, J.D. Power warned that climbing into a car with no driver and expecting that car to take the rider to a predetermined destination is something about which most consumers are skeptical. “However, once someone rides in a robotaxi, they like it,” noted the research firm. Consumer confidence when riding in a fully automated, self-driving vehicle was noted to be 56 percentage points higher among those who have ridden in a robotaxi (76%) than the general population who had not had the experience (20%). When asked to describe their ideal robotaxi service, consumers consistently selected image attributes of safe, reliable and trusted. “The robotaxi segment is still anyone’s game, given that most people are not familiar with robotaxi brands and haven’t formed a clear associative imagery,” said Kathleen Rizk, senior director of user experience benchmarking and technology at J.D. Power. “Industry leaders like Cruise (GM) and Waymo (GOOG), along with lesser-known companies such as Zoox, May Mobility and Motional, need to look beyond their deployment markets and find ways to educate and build trust with all consumers.”

Other analysts have observed that the use cases for a robotaxi fleet could be high in certain environments, such as sprawling college campuses or corporate office parks, but could be tricky to scale in some regions.