Tesla "RoboTaxi" to be released next week! Bulls and bears debate fiercely: bulls see key progress, bears question the path to scalability

Tesla's stock is at a critical crossroads, and whether the upcoming RoboTaxi launch next week can restore investor confidence remains to be seen.

According to news from the Chasing Wind Trading Desk, Barclays' latest analysis shows that investors are cautious about Tesla's RoboTaxi launch event scheduled for June 12. The event is expected to showcase vehicles without safety drivers, but the initial scale will be limited—only about 10 vehicles operating within a geofenced area and relying on remote operation. The vehicles are expected to adopt a conservative operating model, avoiding "risky" roads.

Barclays pointed out that while such events are typically seen as opportunities for "sell the news," the greater significance of this launch lies in solidifying the RoboTaxi/AV (autonomous vehicle) narrative, which has always been a core driver of Tesla's stock.

The report also stated that although Tesla has made impressive progress in autonomous driving, its path to catch up with and surpass industry leader Waymo still faces challenges. Bulls focus on Tesla's rapid iteration of technology and its key moat in data and computing, while bears question the scalability path, such as infrastructure/management relationships with municipal authorities, where Tesla lacks core competitiveness, and also question data quality.

At the same time, the fundamentals continue to deteriorate. The report noted that sales are expected to show negative growth by 2025, profit margins are under pressure, and earnings per share expectations have dropped from $3.20 at the end of last year to currently less than $2.00. For investors, understanding Tesla's valuation hinges on balancing the AV/AI vision with the weak fundamentals and whether the company's capital allocation capabilities are sufficient to support future growth.

The Path to Expanding AV is Controversial

More important than the June 12 launch event is Tesla's path to expanding autonomous driving. Barclays believes that despite Tesla's rapid technological advancements, significant challenges remain in fully unlocking autonomous driving and building infrastructure, making it a daunting task to catch up with or surpass Waymo.

Musk has laid out an aggressive plan for expanding AV:

• Starting with 10 RoboTaxis, gradually increasing to 1,000 within a few months

• Operating from Austin, with plans to expand to San Francisco, Los Angeles, and San Antonio

• Expecting "potentially hundreds of thousands, even over a million (unmonitored fully autonomous driving) Teslas" in the U.S. by the end of next year

However, its competitor, Waymo, a subsidiary of Google, has already achieved significant lead:

• Providing 250,000 paid autonomous rides weekly

• Offering services in San Francisco, Phoenix, Los Angeles, and Austin (through Uber partnership)

• Testing in multiple cities including Boston and Nashville

• Accumulating over 50 million miles of autonomous driving mileage and 10 million paid rides

Barclays pointed out that the main challenges Tesla faces in the expansion process include:

1. Handling edge cases/extreme situations

2. Localized parameter adjustments

3. Infrastructure construction and regulatory approvals

Bull vs Bear Debate: Bulls See Key Progress, Bears Question Scalability Path

Bulls believe Tesla has unique advantages:

• Rapid Iteration and Improvement: Tesla can quickly enhance its technological capabilities, and the products seen currently are just the basic versions.
• Data and Computing Power Advantage: With a fleet of 5 million vehicles equipped with FSD hardware and software and 100,000 GPUs, Tesla has formed a data/computing power advantage that is hard to replicate.
• Unlimited Market Space: The U.S. drives over 3 trillion miles annually, and even if Tesla captures only a small portion, it represents a huge revenue opportunity.
• More Efficient Scalability Path than Waymo: Tesla's low-cost approach is a key advantage, with Musk believing that Tesla's vehicle costs are only 20%-25% of Waymo's.

The bearish perspective argues that the scalability process is challenging, emphasizing Tesla's lack of core capabilities in infrastructure management and relationships with local governments, while also questioning data quality:

• Limited Data Richness: Even with 9 cameras per vehicle, the data may still not be rich enough compared to competitors.
• Sensor Placement and Protection Issues: The placement of sensors (e.g., inside the B-pillar) may partially limit the vehicle's capabilities, and weather protection is also a challenge.

Additionally, the U.S. autonomous driving competition is not limited to Tesla and Waymo; companies like Rivian, Mobileye, and Wayve are also vying for market share, each offering different versions of end-to-end models and AI applications.

Fundamentals Clearly Deteriorating, But Does It Matter?

Investors are surprised that despite the deteriorating fundamentals, Tesla's stock price remains strong. Specific points of decline include:

• Expected negative year-on-year sales growth in 2025, with first-quarter sales already down 13%.
• Sales in the European market have declined by about 40% year-to-date, while sales in the Chinese market have decreased by about 7%.
• Profitability is under pressure, with energy business margins affected by tariffs.
• A new issue of rare earth magnet supply shortages may pose additional challenges.

Barclays points out that the weakness in the automotive business should not be overlooked, as it is the source of funding for autonomous driving/AI efforts. Tesla's free cash flow has decreased from $7.6 billion in 2022 to $3.6 billion in 2024, with an expected $3 billion in 2025. One possible option is to issue more stock at its low capital cost, which could help fund investments in autonomous driving/AI.

Barclays believes that the Robotaxi launch event may not meet expectations, and the issue of weak fundamentals has not been adequately addressed, but in the long run, the market's perception of Tesla's autonomous driving/AI value will not change as a result.