Tesla shares are tanking after recording 10 straight sessions of gains. The EV maker will have to cancel its August Robotaxi event as per people familiar with the company’s decision.
The main reason for the cancellation is supposedly a design rework on some elements of the car. But no one at Tesla has yet confirmed it.
This comes as a shock, and that is reflected in the share price which is trading down 6%. Traders were hoping for an extended rally leading into the event but now have to deal with the aftermath of the announcement.
The market reaction isn’t something Tesla traders are unfamiliar with. Elon Musk’s antics have caused similar stock movements in the past.
A brief history
The Robotaxi event had an eerie unpredictability surrounding it. If you asked a Tesla shareholder if he’s surprised by the announcement, the answer will probably be in the negative.
You see, Tesla’s event aren’t always as organised as other tech companies. And the Robotaxi event really takes the cake in that regard.
In April this year, there were rumours that Tesla had completely abandoned its low-cost car plan. Musk then clarified that the low-cost car would be the Robotaxi that will run on its Full Self Driving (FSD) software.
He then announced an August launch date, which in hindsight was clearly a hasty move. It did help the company back then but has come back to bite them now as share price keeps falling.
While the knee jerk reaction will clearly be negative on a delay of August 8th based on this report that just hit, we believe the timing of robotaxis, partnerships, and the ultimate autonomous and AI driven technology does not change at all for our bullish Tesla thesis
Daniel Ives, Wedbush Securities
Why is the Robotaxi important?
The Robotaxi is a part of Tesla initiative to shift from mainly a car maker to an AI company. Its AI plans include autonomous driving, Robotaxis, and its humanoid robot called Optimus.
The above plans are part of a strategy to counter the slowdown in EV sales. Tesla is unique in the sense that it has a lot of other projects to focus on even if the sales slowdown.
Tesla already has enough vehicles on the road to get meaningful help in the form of data for training its FSD software. It is way ahead of other EV companies in that regard. So an industry wide slowdown hurts other companies way more than it hurts Tesla.
The current announcement is only a small setback for Tesla and the negative reaction is likely to be short lived. If any company is going crack FSD, it has to be Tesla. Long-term shareholders will hardly be bothered by this. They’d rather the company takes its time and gets it right.
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