In Tesla’s earning call Wednesday the company’s CEO Elon Musk admitted things look pretty dire. Tesla’s earnings dropped for a second straight quarter by a staggering 16% — the largest quarterly drop for the company in a decade. Musk said that, thanks to tariffs and regulatory changes brought on by a president he himself championed, Tesla likely has a few more rough quarters ahead. But it’s not as bad as it all seems. There is a glimmer on the horizon — according to Musk, the company’s infant robotaxi service, which recently began operations in Austin, Texas, will cause an avalanche of profits late next year when Tesla robotaxis will fully reach half of Americans.
Well, not to defecate in anyone’s decaf, but that ain’t happening. Of all of Elon Musk’s pie in the sky promises, this one rings the most hollow. Tesla’s stock price following the disastrous call reflects that maybe, just maybe, the market finally knows Musk is in a corner, and out of ideas.
Let’s check in with Waymo, shall we?
Companies that have been running robotaxis for years are still burning money at an alarming rate. Waymo said in May that the company is giving 250,000 paid trips a week to a large customer base in four major American cities, with three more — Atlanta, Miami, and Washington, D.C. — planned to launch in 2026. It’s by far one of the most successful companies to step into the emerging robotaxi model. Waymo’s been offering driver-free rides to the public since 2018, and despite some growing pains it has proven safe and effective. Waymo is literally the best to have ever done it up to this point. So, how much money is this titan of self-driving making each year?
Unfortunately, it’s clear Waymo is costing its parent company, Alphabet, billions in financial losses every year. Forbes didn’t mince words in a recent report:
“While Google does not break down Waymo’s financials, its Other Bets segment, which includes the robotaxi startup, posted a $4.4 billion loss over the last fiscal year. The cost base is high. Waymo owns the vehicles it operates, a contrast to ride hailing players such as Uber. Then, there are the costs tied to vehicle retrofitting, mapping, and fleet management. This means that Waymo has yet to demonstrate a path to profitability, even at the relatively large scale it is currently operating at. Waymo still loses money on every ride it delivers. This has meant that Waymo is burning through cash and remains dependent on external funding.”
Self-driving predictions of quarters past
It’s not just Waymo feeling the pinch; many self-driving taxi services have come and gone, buckling under the weight of profit loss or bad publicity. The $3 trillion-endowed HSBC bank predicted just this week that it could take up to eight years for self-driving operators to break even on robotaxis.
Last year, on the Q2 earnings call, Musk said he’d be surprised if Tesla didn’t have “Full-Self Driving” this year. Instead, a full year later, the company is battling in court over its allegedly misleadingly named “Autopilot” and “Full-Self Driving” causing customer’s deaths. With just a handful of robotaxis offering free rides in a small slide of Austin to via invite only and with a human minder in the passenger seat, you have to wonder if this is just another out-of-pocket promise is the kind of “corporate fluffery” that Tesla has engaged in in the past.
The market says no
Now it seems Musk’s promises are hitting less hard than they used to. The normal stock market price bump the automaker usually experiences after Musk makes big quarterly meeting promises hasn’t happened. In fact, Tesla’s shareprice dropped nine percent as of this writing, wiping out $12 billion in wealth from Elon Musk’s net worth, according to the Economic Times.
But hey, maybe Tesla will finally build that affordable vehicle its been—oh, what? It’ll just be a cheaper Model Y? Since the Model Y is already the brand’s best-seller, I guess the plan is to sell more Model Ys, but these will likely be decontented models, and therefore less desirable. Cool. It’s not like EV customers can look to the radically depreciated used EV market for a vehicle that is both affordable and heavy on features. In the meantime, sales in foreign markets like Canada and Europe have dropped to a trickle.
And none of this even calls in the sales disaster of the Cybertruck! Tesla is in quite a pinch and the path through doesn’t look too bright. Will the meme stock that started meme stocks survive under this onslaught?
