Tesla’s First Robotaxi Already Broken

Tesla Inc.’s (NASDAQ: TSLA) first test of the robotaxi on the open road has started in Austin. The intent is to demonstrate that the electric vehicle (EV) company has developed a completely self-driving vehicle that requires no driver. Based on a video of one of the vehicles driving erratically and a request about the incident from the National Highway Traffic Safety Administration, the experiment may already be in trouble.

CNBC reports that “In the videos shared widely online, one Tesla robotaxi was spotted traveling the wrong way down a road, and another was shown braking hard in the middle of traffic, responding to ‘stationary police vehicles outside its driving path,’ among several other examples.” The NHTSA said it “is aware of the referenced incidents and is in contact with the manufacturer to gather additional information.” It is far too early to tell what its query will lead to.

What’s at Stake for Tesla

It is impossible to exaggerate what Tesla’s experiment means to its future, and how much the EV company and its investors have on the line. Tesla aims to demonstrate that its AI-based self-driving technology is significantly superior to that of any competitor. Among those competitors that are well along in testing is Google’s Waymo, which is conducting tests in several cities.

Tesla is attempting to move beyond its current Full Self-Driving (Supervised) system. Tesla claims this is the industry standard, but it still requires a driver’s attention. If it can build a car that needs no driver, it will be the first commercial car company to achieve this. Such a product would revolutionize the entire industry.

Tesla’s market cap of $1.13 trillion is more than all other publicly traded car companies combined. Tesla suggests that it should be viewed as an artificial intelligence company and valued accordingly.

Tesla adds two other factors to its case. Its technology has recorded millions and millions of miles accumulated by its cars across America’s roads. No other car company has this data inventory to enhance self-driving software. It also said it can update most of its cars with the new self-driving car technology via a software download that requires no visit to a dealership.

If the robotaxis in Austin break down, Tesla’s case about its valuation starts to go away.

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