Tesla’s New Cybercab: The Future of Robotaxis

In Brief:

Tesla CEO Elon Musk introduced the two-door robotaxi, Cybercab.
Production will begin in 2026, priced at less than $30,000.
This robotaxi will be available to passengers via an app.

Elon Musk Unveils Tesla’s New Two-Door Robotaxi

Tesla CEO Elon Musk unveiled a long-awaited robotaxi with two gull-wing doors and no steering wheel or pedals at an event on Thursday. This milestone sets the stage for what he believes will drive long-term growth for the electric vehicle maker.

Musk announced that production will start in 2026 and the vehicles will be available for customers to buy for less than $30,000. They will cost 20 cents per mile to operate. “The vast majority of the time, cars are just doing nothing,” Musk stated on stage. “But if they’re autonomous, they could be used five times more, maybe 10 times more.”

Enthusiasm surrounding the event was evident on social media, with screenshots of invites and speculation about potential disclosures. However, investors and analysts flagged challenges with the technology and tempered expectations.

Stellantis chairperson John Elkann was spotted in the audience alongside Musk’s younger brother, Kimbal.

Musk’s plan involves operating a fleet of self-driving Tesla taxis called Cybercabs, which passengers can hail through an app. Individual Tesla owners will also be able to earn money by listing their vehicles as robotaxis on the app.

The event at Warner Bros studio near Los Angeles was titled “We, Robot,” a nod to the “I, Robot” science-fiction short stories by American writer Isaac Asimov. It also echoes Musk’s assertion that Tesla should be considered an AI robotics company rather than merely an automaker.

Attendees include investors, stock analysts, and Tesla fans. Their primary questions will revolve around how quickly Tesla can ramp up robotaxi production, at what cost, and crucially, how much revenue it can generate from the taxi business.

Attention will also be on the progress made with the partial automation software marketed as Full Self-Driving (FSD), which industry observers expect will underpin its robotaxis.

Musk may also share details on cheaper versions of Tesla’s current electric vehicles and updates on its humanoid robot, Optimus.

Missed Promises

In 2019, Musk expressed “great confidence” that the company would have operational robotaxis by the following year. After missed promises, he shifted focus to developing the vehicles this year after scrapping plans to build a smaller, cheaper car deemed essential to counter slowing EV demand.

Tesla faces the risk of posting its first-ever decline in deliveries this year, as buying incentives have failed to attract enough customers to its aging EV lineup. Significant price cuts meant to offset high interest rates have also squeezed profit margins.

To reassure investors that Tesla can maintain the blistering growth reported in several previous quarters, analysts stated that Musk needs to demonstrate a prototype and provide detailed plans on how Tesla can surpass competitors like Alphabet’s Waymo, which operates uncrewed robotaxis transporting paying passengers in select U.S. cities.

Complicated technology and strict regulations have led to billions in losses for other companies attempting to enter the robotaxi market, forcing some to shut down.

However, others are still pushing forward, including General Motors’ Cruise, Amazon’s Zoox, and Chinese firms like WeRide.

Unlike expensive hardware like lidar that others utilize, Musk is relying solely on cameras and AI to drive FSD, in a bid to keep costs down. However, FSD requires constant driver supervision and has faced regulatory and legal scrutiny, including two fatal crashes tied to the technology.