Tesla (NASDAQ:TSLA) CEO Elon Musk said the company will unveil its robotaxi on Aug. 8.
The robotaxi is designed for autonomous driving without pedals or a steering wheel.
The announcement sent TSLA stock up 2% over the weekend. It is expected to open this morning at $171 per share, a market capitalization of about $537 billion.
Breakthrough? Or Distraction?
Critics are calling the announcement, made on Musk’s X social media platform, a distraction. The company reported lower deliveries in the first quarter and has repeatedly failed to deliver full self-driving (FSD).
Autonomous driving technology has proven difficult to implement since Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) began working on it 15 years ago. The main problem is that the cars can’t deal with the unpredictability of human beings. They also have trouble distinguishing real hazards, like light poles, from fake hazards like traffic cones. Alphabet now offers Waymo automated taxi service in Phoenix and San Francisco, but is trying to expand it to other cities.
Tesla has promised self-driving cars since 2016. Last year, the National Transportation Safety Board concluded that Tesla’s technology can be misused.
Most worrisome to financial analysts is that Musk seems to be walking away from promises of a $25,000 car that could compete with BYD (OTCMKTS:BYDDF) and other Chinese brands. The company teased a “next generation” vehicle at its January earnings call.
Analysts have been souring on TSLA stock, with seven of 35 at Tipranks recently calling it a sell and just nine calling it a buy. At Stocktwits, sentiment is called extremely bearish.
I have long been bearish on Tesla, which means I missed its rise. But I have maintained that position, especially since the launch of the Cybertruck, which I called a distraction.
TSLA Stock: What Happens Next
Time will tell whether Tesla can deliver on its self-driving promises. Time seems to be what Musk is buying. But sales must pick up for the stock to recover.
As of this writing, Dana Blankenhorn had a LONG position in GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
