(Bloomberg) -- Elon Musk went all-in to get robotaxis onto roads, sacrificing a widely anticipated cheaper car, gutting teams focused on other projects and downplaying Tesla Inc.’s sales slowdown.
So when Musk finally unveils autonomous taxi prototypes late Thursday, the chief executive officer will have a lot to prove. He’s promised nothing short of a new era for transportation, in which Teslas with empty driver seats zip around with paying passengers, making money for their owners while they’re asleep or at work.
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For all of Musk’s years of premature predictions that autonomous Teslas were just around the corner, investors have bid up the company’s shares in recent months in anticipation of a product that’s actually ready, or at least close to it. Meeting those expectations will require credible plans to leapfrog the likes of Alphabet Inc.-backed Waymo, which leads a field of companies already offering driverless rides.
“If they just show something that doesn’t actually demonstrate the technology, a prototype of a vehicle that doesn’t move, that’s going to go over like a lead balloon,” said Gene Munster, managing partner of growth-investment firm Deepwater Asset Management.
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The event Tesla has dubbed “We, Robot” — a likely nod to Isaac Asimov’s I, Robot collection of short science-fiction stories — is scheduled to begin at 7 p.m. California time at Warner Bros. Discovery Inc.’s movie studio near Los Angeles. Wall Street analysts and many of Tesla’s most prominent influencers are among those invited to attend.
Here’s what to expect:
Cybercab
Musk has referred to the event’s showpiece product as Tesla’s purpose-built robotaxi, or Cybercab. It’s expected to differ from the carmaker’s other models in that human drivers won’t need to be present to operate the car.
Tesla’s robotaxis likely will use a combination of cameras and computing power to navigate the roads. While self-driving vehicles from General Motors Co.’s Cruise and Waymo also rely on laser-based sensors known as Lidar, Musk has dismissed them as too expensive and unnecessary.
Design
Tesla has kept the final design of the robotaxi under wraps, but the vehicle is expected to have two front seats and two doors that open upward like butterfly wings, according to people familiar with the matter.
There’s a chance Tesla also reveals another new car. Some investors believe that Musk will showcase some kind of robovan that can carry a dozen people or more, or be used as an autonomous delivery vehicle.
Technology
For the Cybercab to work, Tesla will need to make major strides in artificial intelligence.
Thousands of existing Tesla owners have for years been paying thousands of dollars for a suite of features the company markets as Full Self-Driving, or FSD. The company’s driver-assistance features require constant supervision and don’t make its vehicles autonomous.
The CEO is also expected to talk about Tesla’s plans to develop FSD for its Semi truck, and how he sees the technology being used to haul cargo, two people familiar said. However, there won’t be any demos of the Semi using FSD at the event, the people said, asking not to be identified because they weren’t authorized to speak.
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Regulation
Assuming Tesla can pull off the necessary technological breakthroughs, it will need regulatory approval to launch.
Tesla notably opted to hold its robotaxi unveiling at a Warner Bros. lot with non-public roads. Offering a commercial passenger service with autonomous vehicles in California requires a deployment permit Tesla hasn’t applied for. Its competitors are further ahead in this respect.
Business Model
Musk has described the service he wants to offer as working something like a combination of Uber Technologies Inc. and Airbnb Inc. (Joe Gebbia, an Airbnb co-founder, joined Tesla’s board two years ago.)
Individual Tesla owners would be able to lend their vehicles to a Tesla fleet when they’re not using them. Those cars would be supplemented by the purpose-built robotaxi to meet demand.
Optimus
Musk has been focused on expanding the capabilities and eventually producing a humanoid robot, called Optimus.
Given the “We, Robot” event name, the CEO is expected to give some sort of update on the product, which he’s said will be manufactured in limited quantities starting next year.
Cheaper Cars
Although much of the hype leading up to the event revolves around the robotaxi, Tesla has a more immediate issue: it’s on track to record its first ever annual vehicle sales decline.
Tesla delivered just shy of 463,000 cars and trucks in the third quarter, missing analyst estimates. The company has had little to say about more affordable models first teased in April and slated for production next year.
The company has said these vehicles will be built on existing production lines, so they could just be cheaper versions of its best-selling Model 3 sedan or Model Y sport utility vehicle.