3 Reasons Why Tesla’s Robotaxi Can’t Be a Game Changer, According to Ford CEO

adzehis (TSLA 3.80%) this year’s upcoming robotaxi event is likely to generate a lot of fanfare. It can help highlight how far the company has come in terms of its self-driving capabilities. If successful, it has the potential to drive the stock to new heights.

But not everyone is convinced that a robotaxi is what the industry needs or that it will be an amazing growth opportunity. Ford Motor Company CEO Jim Farley recently discussed what a robotaxi could mean for the industry and its limitations. Here are three reasons why he doesn’t think it will change the game.

1. Technology is limited, for now

Farley says the technology for robotaxis is limited, noting that if there are bad weather conditions (i.e. rain or snow) or if there’s a problem, a “physical back-up plan” will be needed.

While the technology may improve to a point where this is no longer the case, as long as robotaxis only work under ideal conditions, it could significantly impact their utility. Which means that robotaxis won’t make a major dent in the automotive industry in the near future.

2. Many robotaxi companies control the vehicles remotely

Another thing Farley found is that many robotaxi companies have “warehouses full of people remotely controlling the vehicle.” Of course, robotaxis are not truly autonomous if they require someone to continuously monitor them.

If Tesla can’t demonstrate that its robotaxi goes beyond what Farley saw, commercial adoption could be limited because it would mean the company would need to hire a significant number of staff to oversee a fleet of robotaxis. This could drastically increase costs and limit the profit potential from this opportunity. And it certainly wouldn’t be a testament to the company’s self-driving capabilities.

3. May require too much regulation

Ultimately, Farley and his team also concluded that the market opportunity was not attractive enough and compelling enough to focus on robotaxis. His concern is that robotaxis would add a lot of congestion to the roads, and that regulators would probably have a problem with that, potentially leading to significant regulation and red tape.

And if there’s one thing that can limit a company’s growth opportunities, it’s a lot of hurdles from regulators.

Tesla investors should look for solutions to these problems at the upcoming robotaxi event

Tesla will unveil its robotaxi on October 10. But investors should remember these issues when the event rolls around to see if Tesla CEO Elon Musk has answers for them. While the robotaxi may work at an event and look like a game changer, if it’s remotely controlled by someone or can’t handle adverse weather conditions, investors should take any such achievements with a grain of salt. salt.

There is often a lot of hype that comes with electric and autonomous vehicles. The danger is that investors invest based on a technology they do not fully understand, including what its limitations and challenges are. Inside a controlled event and a scene where conditions are ideal, things can look perfect. But the reality can be much different. Investors should not forget this when watching the robotaxi event.

Should You Buy Tesla Stock Today?

Tesla shares have fallen 17% this year as concerns grow about its shrinking margins and growing competition from China. At a multiple of 60 times earnings, you’d have to be a big believer in Musk’s vision not just for electric vehicles, but for AI as a whole, to be able to look past its lofty valuation and still believe it’s a good buy right now.

I would suggest holding off until at least after the robotaxi event to see if Tesla’s technology can prove to be superior to what Farley has seen so far. If it isn’t, that could be confirmation for investors that Tesla is too risky to invest in.