Elon Musk is keeping investors’ dreams of Tesla’s robot taxis alive

By almost any measure, of Tesla Tuesday’s first-quarter earnings report was dismal. The company missed the top and bottom line estimates. Revenue fell 9% year over year, the worst decline since 2012. Auto sales fell 13% from the same period in 2023. Free cash flow turned negative.

But CEO Elon Musk played down most of that and suggested investors turn their attention elsewhere.

Instead of dwelling on quarterly financials or the massive restructuring announced last week, Musk reiterated his vision for Tesla as a company that builds artificial intelligence software to turn existing cars into self-driving vehicles, special robotics that will make money for its owners and a driverless transport network.

This is the Tesla that Musk is selling to Wall Street and telling any doubters to stay away.

“If someone doesn’t believe Tesla is going to solve autonomy, I think they shouldn’t be an investor in the company,” Musk said on the earnings call. He added: “We will and we are.”

Tesla shares jumped 13% in extended trading Tuesday after the earnings report, despite the disappointing results. Some of the optimism was related to Tesla’s announced plans to begin production of new affordable electric vehicle models in “early 2025, if not later this year.”

Stocks rallied during the earnings call as Musk turned to the future. He casually mentioned that the company’s robotics, which he had long said was coming, would be called CyberCab. In the shareholder deck Tesla released ahead of the call, the company unveiled a “preview of ride-hailing on the Tesla app.”

Musk also talks about a driverless network that is like Uber with Tesla autonomous cars.

“When the car isn’t moving,” Musk said, “there’s the potential to actually do distributed inference” through the hardware that’s in the cars.

Musk has been making similar statements for years.

In 2015, Musk told shareholders that Tesla cars would achieve “full autonomy” within three years. They didn’t. In 2016, Musk said a Tesla car would be able to drive without human intervention before the end of 2017. That hasn’t happened either.

And in 2019, during a call with institutional investors who would help him raise more than $2 billion, Musk said Tesla would have 1 million robotics-ready vehicles on the road by 2020, capable of to complete 100 hours of driving per week each making money for their owners.

The robot taxi would make Tesla a $500 billion company, he said at the time. Tesla’s market capitalization is around that mark right now and will even surpass $1 trillion in 2021, but the company has never been able to deliver on its driverless promises.

NBC News reported recently that the company has not even applied for permits to allow it to test and operate robotics in three states, including California and Nevada, where thousands of people are employed.

Separately, the California Department of Motor Vehicles filed a legal complaint against Tesla, saying it engaged in false advertising and marketing regarding its driver assistance systems – Autopilot and Full Self-Driving (FSD) systems. Autopilot is standard, and FSD costs $99 per month or $8,000 up front. Both require human drivers behind the wheel, ready to steer or brake at any time. Tesla is defending itself in court against the allegations.

Musk owns a 20.5% stake in Tesla, more than 715 million shares, as of March 31, according to the company recent proxy filing. He used about 238.4 million of those shares as collateral to secure personal debt. In January, he began seeking even more control of Tesla.

“I’m uncomfortable growing Tesla as a leader in AI and robotics without having ~25% voting control,” he wrote in a post by X. “Enough to be influential, but not so much that I can’t be overturned.”

Musk created a new startup, xAI, to develop AI products to rival theirs Microsoft-OpenAI supported. Before starting xAI, he was already the CEO of Tesla and SpaceX and was the CTO of X, which he owns. He is also the founder of the brain computer interface company Neuralink and the tunneling venture The Boring Co.

Alex Potter, an analyst at Piper Sandler, asked Musk during the earnings call if he would “figure out some mechanism” to ensure he would have the necessary level of voting control at Tesla because, if not, “the main part of the thesis may be at risk.”

“No matter what, even if I get abducted by aliens tomorrow, Tesla will solve autonomy, maybe a little bit slower, but it will solve autonomy at least for vehicles,” Musk said. “I don’t know if it will win in terms of Optimus or in terms of future products, but there is enough momentum for Tesla to solve autonomy, even if it goes away, for vehicles.”

But he quickly told investors that the company needed him to achieve its loftiest goals.

“If we have a super-sentient humanoid robot that can follow you indoors and you can’t run away from, we’re talking Terminator-level risk, yeah, I’d be uncomfortable if there wasn’t some significant level of influence on how that is used. ,” he said.