Tesla's Sporty Robotaxi Design Raises Questions

Tesla recently unveiled a new robotaxi, presenting it as a sleek, low-slung, two-seater coupe. This design is strikingly different from conventional taxis, which usually can accommodate multiple passengers and their luggage. The announcement has left both investors and industry experts puzzled.

During a highly anticipated event near Los Angeles, CEO Elon Musk showcased the prototype of the Tesla robotaxi, named Cybercab. He indicated that production will commence in 2026, with a projected price tag of under $30,000.

However, Musk did not address critical questions regarding how this two-seater design would meet the needs of families heading out to dinner or catching a flight. His focus seemed to be on the concept's appeal to a more niche segment of customers.

Investors reacted negatively to the announcement, reflected in a 9% drop in Tesla stock on Wall Street the following day. As Jonathan Elfalan, the vehicle testing director at Edmunds.com, pointed out, "When you think of a cab, you think of something that’s going to carry more than two people. Making this a two-seat-only car is very perplexing."

Tesla did not respond to a request for further clarification regarding the design.

Advisors from the automotive industry argue that robotaxis should ideally resemble conventional taxis, featuring more space, a taller frame, and sliding doors for ease of entry. Musk did also present a futuristic robovan capable of transporting up to 20 passengers but did not provide a timeline for its availability.

The market for two-door robotaxis seems limited. Data from J.D. Power indicates that two-door vehicles make up only 2% of car sales in the U.S., excluding SUVs and trucks.

Musk suggested that the operating costs for the Cybercab would be lower than those of public transportation, estimating costs at around 20 cents per mile over time. However, specifics about how quickly Tesla can manufacture these vehicles or secure necessary regulatory approvals remain unclear. Additionally, the competition posed by other companies, like Alphabet’s Waymo, which already deploys robotaxis in several U.S. cities, adds another layer of complexity.

Waymo operates a fleet of around 700 Jaguar Land Rover cars, which can carry up to four passengers, similar to Amazon’s Zoox robotaxis. Former Waymo CEO John Krafcik commented that Tesla's Cybercab design appeared "more playful than serious," noting that a two-door setup could present challenges for elderly users and those with disabilities.

Successfully delivering the robotaxi and penetrating this emerging and heavily regulated market is crucial for Tesla's future. Earlier this year, Musk abandoned plans to create a smaller, less expensive vehicle due to a decline in electric vehicle demand and shifted focus towards advancing Tesla’s autonomy goals. Musk has claimed that the robotaxi venture has the potential to boost Tesla’s market valuation from approximately $700 billion to an astounding $5 trillion.

Experts like Sam Fiorani, vice president at AutoForecast Solutions, emphasize that while two-seater cars have been suggested as commuter options for many years, they have not gained widespread popularity. He pointed out that Tesla might eventually need to produce larger robotaxis to meet market demand.

Blake Anderson, a senior investment analyst at Carson Group and a Tesla investor, expressed skepticism regarding the Cybercab’s orientation toward a broader market. He remarked that if the goal is to make a lower-cost model that attracts more customers, the two-seat concept might not be the best approach. "It’s probably a way that they can introduce something quick to market," he suggested.

Tesla, robotaxi, design