Hi Scott,
I’m wondering if you have changed your tune on investing in Tesla? Ark Invest guru Cathie Wood has just added to her stake in the company in anticipation of the robot taxi revolution. She forecasts it will be a $10 trillion global market, says Tesla will capture the bulk of that, and predicts it will boost Tesla’s share price tenfold. Elon is obviously a genius and he has said that robot taxis are the future for Tesla. So, given the share price has been whacked recently, is now the time to buy some shares?
Trevor
Hi Trevor
Well, paint me red and call me Randy, but I’m shocked.
For years I’ve been highly skeptical that fully autonomous driving would happen.
Yet I’m happy to admit I was wrong.
Waymo, Google’s robotaxi company, has not only got driverless taxicabs, they’re now taking 100,000 paid rides each week in the US (up from 50,000 a few months ago).
Even better, they’re safer than us humanoids. Well, at least the company claims that their robots are much safer: they’ve recorded just 0.4 injury-causing collisions per million miles driven, whereas humans are involved in 2.78 per million miles.
So, in major cities at least, it looks like robotaxis really are the next big thing.
Yet it’s here that guru stock picker Cathie Wood and I conk out.
I wouldn’t want Cathie in the cockpit of my portfolio: her Ark Invest has destroyed US$14 billion in wealth over the past decade, according to Morningstar, which tracks her funds.
And, looking over her Tesla research, I can understand why. It’s pure spin from a fund manager who is trying to boost the stock price of a company she already owns.
How did she come up with the ‘1,000 per cent’ return assessment?
Well, Cathie is predicting that, in less than five years, an unbelievable 90% of Tesla’s future earnings will come from something that doesn’t exist yet:
Robotaxis.
To be fair, Elon Musk announced that Tesla was on track to have 1 million robot taxis on the road … by 2020.
Today?
Tesla has zero robotaxis. In fact, the fine print on their website says that Tesla’s Autopilot feature “does not make the vehicle autonomous”.
Now I don’t doubt that Tesla will move into robotaxis … but this brings us to the crucial point:
Will these robots make investors rich?
On this point, I’m still very sceptical. After all, in China, the main selling point of robotaxis is that they’re cheap as chips. According to a report in the Global Times, base fares start as low as 4 yuan (83 cents), compared with 18 yuan ($3.73) for a taxi driven by a smelly human.
That sounds like a driverless race to the bottom to me.
Scott.