Elon Musk, the wealthiest person on Earth, got significantly richer on Monday after Tesla (NASDAQ:TSLA) debuted its robotaxi services in Austin, Texas.
Tesla shares jumped 8.23% or £19.48 ($26.52) to close at £256 ($348.68) apiece yesterday, adding £62.42 billion ($85 billion) to its market cap in a single day. Musk, who owns 12.7% or 410.79 million of Tesla's outstanding shares plus an additional 9% equity stake pending legal challenges, witnessed his net worth increase by £10.94 billion ($14.9 billion) overnight to reach £311.31 billion ($423.9 billion).
Tesla stock trading volume on Monday surged to over 186 million shares compared with a daily average of 126.19 million. Shares were up another 2.21% during pre-market hours on Tuesday.
The Tesla stock rally erased all losses incurred in early June, which was triggered by a public feud between Musk and US President Donald Trump.
Musk's careful approach to launching the robotaxis in a geofenced portion in Austin featuring 10 to 20 Model Y vehicles with safety drivers in the front passenger seats for a smooth debut secured the confidence of investors.
The robotaxi launch follows many years of safety issues in its full self-driving initiatives. The service is currently limited to select users who agree to the terms of Tesla's 'early access program.' According to media outlets, people who received invites are primarily promoters of Tesla's products and CEO Elon Musk.
Reports of Chaotic Driving Emerge
In multiple videos shared across social media platforms, Tesla robotaxis were seen travelling in the wrong direction on the road, hard-braking in traffic, and responding to 'stationary police vehicles outside its driving path.' More videos shared by Tesla investors and supporters showed that the robotaxis exceeded local speed limits.
Soon after the videos of robotaxis driving in a chaotic manner on public road emerged, the electric vehicle company was contacted by the US National Highway Traffic Safety Administration.
A NHTSA spokesperson said that the agency 'is aware of the referenced incidents and is in contact with the manufacturer to gather additional information.'
The agency had earlier initiated an investigation into potential safety defects with Tesla's FSD-Supervised technology following injurious and fatal accidents. That investigation is still ongoing.
However, analysts like Wedbush's Dan Ives remain bullish on the Tesla stock, stating that the robotaxi launch exceeded expectations. The brokerage maintains a £367.20 ($500) stock price target for Tesla. Other brokerages like Morgan Stanley and Piper Sandler also reiterated their overweight rating on the stock earlier this month despite heightened volatility.
The Tesla stock has faced prolonged downward pressure since Musk's involvement in driving major federal changes as chief of the US Department of Government Efficiency. The stock is down 13.66% year-to-date. During the past six months, the company's growth outlook also worsened after it recalled over 46,000 Cybertrucks in the US to fix an exterior panel, and multiple board members offloaded over £73.44 million ($100 million) worth of the stock.
Why RoboTax Lauch Matters.
The implication of this launch matters far more than the personal wealth of Musk. Musk has been building up the reputation of Tesla not only as an electric car company but as one of the leaders in artificial intelligence and robotics over the years. The launch of the Robotaxi is also a significant step toward that same vision, which implies that Tesla aims to transform city transportation and tap new revenue opportunities.
More optimistic analysts, calculate the eventual payback through autonomous technology which they assume might bring in trillions of dollars to Tesla.
However, it similarly reveals how much Tesla aims high and how much its technology has yet to achieve. Robotaxi service is not autonomous. Safety drivers are still required, and the service area is limited and closed. Real-life self-driving cars on the streets on a scale of millions of vehicles is a big step to the scene of a dozen supervised vehicles.
Moving ahead, the launch of Robotaxi can be seen as a daring undertaking of Tesla and will give us an indication of what is in the store. Tesla is well past its trendy-Elon innovation stage; nonetheless, the market seems to believe that the company will be able to deliver on the promises in the vision of mass-market Robotaxis, which ultimately will require years of research and development to execute. The enthusiasm is genuine, and so are the challenges that lie ahead.
Disclaimer: This digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.
