Tesla Likely to Launch Robotaxi Service in Next 5 Years, May Account for 90% of Future Profit (2024)

Tesla is on the verge of its Robotaxi announcement event on 8/8, and major investors like Ark Invest are examining and refreshing their bull case scenarios.

Robotaxi as a Focus

Ark Invest sees Robotaxi as a focus of Tesla’s ongoing business and sees Tesla’s autonomous ride-hailing revenue to net nearly $1 trillion in 2029. In comparison, they estimate Tesla’s vehicle sales to account for $0.4 trillion in revenue. With this bull case, Ark Invest also sees Tesla’s share price soaring to $3,100 by 2029. Ark Invest’s bear case sees the share price moving to $2,000 and robotaxi netting $0.63 billion in revenue.

Ark Invest gives Tesla a 58% chance of launching its robotaxi service in 2025, and a 38% chance in 2026. It’s clear that Tesla’s future lies in operating a fleet of autonomous vehicles and the question is just when it will happen. Given FSD’s massive improvements between FSD V11 and FSD V12, there is a possibility of Tesla meeting these estimates, although a lot depends on how fast improvements will continue to come. While FSD V12 is impressive, it’s still a long way from a true autonomous vehicle.

Rate of Improvement

Ark’s case is focused on the fact that FSD’s rapid improvement will continue, and a lot of that may be determined with the next few releases, including FSD 12.4.1, v12.5, and v12.6. When comparing Tesla to autonomous vehicles, Tesla has a drastic lead in miles driven, in fact, it’s so large that you can barely even see Tesla’s competitors. Tesla is at 1.3 billion miles driven with FSD, while the closest competitors are just reaching 15 million autonomous miles driven. While there’s a drastic difference in capabilities between Tesla’s FSD and autonomous vehicles such as Google’s Waymo, Tesla has the ability to gather data 86 times quicker.

Training data is key to building autonomous vehicles, and Tesla is currently the king of vehicle-related data.

Services Company

We previously wrote about whether Tesla’s future will be as a car company or a services company – and major investors such as Ark Invest and Morgan Stanley see Tesla’s AI services as a major driver of business in the future, and the focus of future revenue and profits.

Robotaxi, as both a service and as a physical product, has the opportunity to shake up markets in a unique way, providing quick, clean, and safe transportation between local destinations in urban areas, which could quickly outcompete traditional services like taxis, and tech competitors like Uber or Lyft. The market for robotaxi is untapped and massive, but Tesla isn’t the only one chasing the goal.

With the announcement of Apple’s focus on AI in iOS 18 at WWDC Monday, there has been a flurry of interesting news items.

From Elon Musk mentioning that Apple devices may be banned at his companies due to the integration of AI, to Apple allowing developers to add functions to the Control Center, and Musk confirming once again that Tesla has no intentions to produce a phone, it was a busy day.

Control Center

Also at WWDC, Apple showed off an updated Control Center – the swipe-down control menu on iOS. As of iOS 18, third-party developers will now be able to create buttons to add to Control Center.

This is a pretty neat feature and could make it even easier to manage your Tesla from Apple devices. You could soon be able to control the climate or begin charging your Tesla without even opening the app.

You can already do some of these things using Siri Shortcuts, but this could be the granular integration needed to control specific items with even more detail, rather than just simple routines.

Tesla typically launches new features on its iOS app first, and Android devices a few days or weeks later. An excellent example of this is Ultra Wideband support, which came to Apple devices first.

Banning Apple Devices

At WWDC, Apple showed off new AI integration in its OS, which allows users to leverage OpenAI’s ChatGPT. Elon Musk mentioned that this is a massive security concern on a post on X, and he said he may ban the presence of Apple’s devices at his companies.

Tesla App Lead Alex Guichet asked on X if this was any different than Gemini integration on Android – which Google has already announced and begun to roll out to customers in select markets. If you’re in Canada or the United States, you can replace your current Google Assistant with Gemini, which provides a similar level of system integration to Apple.

Since Musk’s initial reaction to Apple’s integration of AI and partnership with OpenAI, Musk’s concerns appear to have eased. Numerous users clarified that Apple is building its own AI, and Apple will not hand over information to OpenAI unless users explicitly confirm they want to do so.

Musk Denies Tesla Phone

Elon Musk has confirmed that even with his potential ban on Apple devices, he is not interested in building a Tesla phone. A Tesla phone has previously been mentioned, and Elon Musk had previously shown interest in the idea, but has also shot it down numerous times over the years.

With this final confirmation, it’s pretty clear that we won’t be expecting a Tesla phone anytime in the future. SpaceX has been working on integrating Starlink cell-to-satellite messaging, calling, and data to existing phones, so we could see further integration in a different way one day.

In a post on X, Tesla listed its achievements since 2018. Perhaps most interesting, Tesla stated it has successfully deployed two Optimus robots in one of its factories. The deployment is a pivotal moment – the first autonomous robots are now beginning to work in factories. This is one of the first examples of the industrial use of humanoid robots.

Optimus

Optimus, Tesla’s humanoid robot, has been designed to take on tasks that require a high level of precision, as well as everyday tasks typically performed by human workers. Tesla has invested heavily in Optimus, and just in the last two years, three major design revisions of Optimus, and four revisions of just its hands have been done. Tesla is placing Optimus pretty highly on its list of difficult challenges to tackle.

Elon Musk has previously mentioned he hopes to have Optimus perform tasks that are boring, repetitive, or dangerous for humans, such as picking up groceries, fixing or building cars, or even building houses.

Autonomy

One of the most unique things about Optimus is the fact that it uses the same core technology that lets Tesla’s cars drive themselves while supervised – as its core software. This enables Optimus to navigate autonomously – first around the labs and offices, and now around Tesla’s factories.

The adaptability of Tesla’s AI in this unique situation is a testament to Tesla’s engineering prowess, as well as FSD’s technology stack to work in unique environments – not on the road. Because Optimus uses AI that’s similar to Tesla’s FSD, it has clearly benefitted from the same updates that FSD V12 has benefitted from, with rapid advances recently moving FSD from its long-time Beta status to its newfound Supervised status.

As Tesla continues to refine Optimus and FSD, we’ll see some drastic advances in autonomous robots. Tesla has mentioned it plans to begin offering Optimus as a purchasable product in the future as it enters the humanoid robot market.