Tesla shares experienced a notable increase of 10% on Monday following the launch of tests for its robotaxi service in Austin, Texas. This development marks a significant milestone for the electric vehicle manufacturer, as it represents the first instance of its cars carrying paying passengers without human drivers. The initial rides are being offered at a flat fee of $4.20 within a designated area.
The success of this trial is critical for Tesla, particularly as CEO Elon Musk has shifted the company's focus toward self-driving vehicles amid increasing competition, particularly from Chinese manufacturers, and a decline in demand for its existing model lineup. Industry analysts, including Dan Ives from Wedbush Securities, have reported positive experiences during their rides, highlighting the robotaxi's ability to navigate complex driving scenarios effectively.
Despite these promising early reports, the test phase is limited, featuring a small fleet of about 10 vehicles with front-seat passengers acting as safety monitors. Experts suggest that scaling up the service could take several years. Musk has expressed ambitious plans, aiming for "hundreds of thousands, if not over a million" Teslas to be operational in self-driving mode across the U.S. by the end of next year.
However, Tesla's self-driving technology has faced scrutiny, particularly regarding its reliance on cameras and artificial intelligence without supplementary sensors like lidar and radar. Furthermore, a new Texas law set to take effect on September 1 will require state permits for self-driving vehicles, indicating a cautious regulatory environment.
If the stock gains persist, Tesla's market value could rise significantly, although it has seen a decline of about 12% this year amid various criticisms and controversies surrounding Musk. The company's valuation remains high compared to traditional automakers and even tech firms.