- Tesla faces several regulatory hurdles before launching a robotaxi service.
- Insurance is already a complicated issue for Tesla cars and trucks.
- High insurance costs can wipe out earnings for Cybercab owners.
There are many hurdles for Tesla’s promised Robotaxi fleet to clear before it takes off, but one hurdle that has been overlooked may be the complexity of ensuring that a fleet of Teslas drive themselves.
Car insurance is already a complicated matter. Uber and Lyft drivers often have to get additional coverage for their vehicles, which can cost them as much as $31 a month on top of their regular insurance policy, according to an insurance comparison site. The Zebra.
Teslas are already more expensive to insure than the average car. The average annual rate for a Tesla Model 3 is $2,221, compared to the industry average annual rate of $1,776, according to NerdWallet.
These costs could undermine CEO Elon Musk’s promise that Tesla will operate a robotics business that combines Uber and Airbnb, where drivers who board their cars in a fleet of robots can profit from their cars. standing.
“It’s nice to have an affordable car,” said Jessica Caldwell, chief information officer for Edmunds, of Tesla’s $30,000 Cybercab. But that can easily be outweighed by the high cost of insurance.
The auto insurance industry has yet to fully embrace autonomous technology, and without coverage, driverless Teslas won’t work.
“Insurance providers haven’t been there yet in terms of how to evaluate these costs, because there aren’t a lot of models that you can do that exist right now,” Caldwell said.
Musk said Thursday night that some Model 3s and Model Ys will operate without drivers in Texas and California before the Cybercab hits the streets, but it was unclear whether drivers will use their cars as passengers. if Tesla can use those cars, or if Tesla owners can rent their cars for driverless cars.
Musk has long said that autonomy will eventually generate profits for Tesla owners. But for ride-hailing firms, insurance premiums are among Uber’s biggest costs, and analysts cite the cost as one of the main drags on profitability.
Elon Musk’s magic may be running out
Over the years, Musk has been able to attract investors with big promises and flashy product unveilings.
But years of broken promises and a struggling EV market are more dubious than ever. Investors want to know when these big investments will pay off.
“Although all this seems good, investors now want to know how real all these cool robots are and when is the time to make money on this,” Caldwell said. “Of course, Tesla is still a car company right now, and they’re not solving the problems of that business.”
Investors were left disappointed on Thursday night after Tesla’s long-awaited We, Robot event, when Musk failed to provide any concrete details about his plan to roll out a fleet of self-driving taxis. with a driver as soon as next year, as he promised at the beginning. Instead, he promised a Cybercab in 2027 and a futuristic Robovan with no set date.
Shares were down about 8% in Friday trading after Thursday night’s event.
“Looking at what is probably the most anticipated product in Tesla’s history, we had a lot of expectations of what the market could learn that we felt caused guidance and debate about the stock,” Morgan Stanley analyst Adam Jonas. , who has a $310 price target for the stock, wrote a note Friday morning to clients.
He added: “Overall we were disappointed with the content and details of the presentation