Tesla's Robotaxi event was long on Musk's promises. Investors wanted more details

A businessman who forever struggles with broken promises, Elon Musk gave himself a to-do list Thursday night at Tesla's ( TSLA ) unveiling of its long-awaited Hollywood driverless robotaxis.

After traversing the cobbled streets of the Warner Bros. movie studio set in a sleek, silver two-door “CyberCab” prototype, Musk promised the company's popular Model 3 and Model Y cars would be able to operate without driver supervision in California and Texas. next year

Musk said the company will start building fully autonomous CyberCabs for less than $30,000 by 2026, and will show off a Robovan capable of transporting 20 people around town — which he said will reshape cities by “turning parking lots into parks.”

Later came dancing humanoid robots that also mixed drinks at the bar, which Musk said Tesla would eventually sell for $20,000 to $30,000 a piece. “I think it will be the biggest product, of any kind,” he declared.

Thursday night's electronic dance music-infused event featured the signature trappings of Musk's salesmanship, but some Tesla investors and experts said they were hoping for more concrete details on how the automaker plans to transform into an autonomous driving and artificial intelligence titan. Solid business plan.

Tesla shares fell nearly 10% in early Friday trading. The stock, which has been battered in recent years by fears of cheaper EV rivals eating into Tesla's market share, has risen nearly 50% since April when Musk announced the shift to Robotoxi. Still, shares are down 8% over the past year, compared to a 33% gain in the broader market S&P 500 index.

“His vision is beautiful, but someone has to make it happen,” said Ross Gerber, a Tesla shareholder and CEO of Gerber Kawasaki Wealth and Investment Management. “For now, for the next 24 months, Tesla needs to sell EVs. Why aren't we paying attention to that?”

Gerber said he was happy to see products like the CyberCab and Robovan, but hoped to see more traditional, low-cost mass-market vehicles that the company could sell in the near future.

Musk had for years promised to sell a car expected to start at around $25,000, a promise investors saw as crucial to winning new customers. Reuters exclusively reported on April 5 that Tesla had abandoned the project, initially lowering Tesla shares.

Shares of ride-hailing companies Uber ( UBER ) and Lyft ( LYFT ) rose about 5.8% and 6.9%, respectively, as analysts said a lack of details about Tesla's robotaxis eased competition concerns for the companies.

'years' behind

Tesla is targeting self-driving players, including Alphabet's Waymo, to pursue a lower-cost technology path, which Musk believes will allow the company to grow its autonomous vehicles much faster than its rivals.

Tesla's strategy is simpler and much cheaper than its rivals, but it has critical weaknesses. Chief among these is that AI technology based on its self-driving system makes it nearly impossible to pinpoint why a crash or other failure occurred — something that could worry regulators.

“Tesla software is at least years behind where Waymo is. That's the hard part. No fancy car design is going to change that,” said Matthew Wansley, a professor at New York's Cardozo School of Law.

Tesla's rivals use similar AI and camera technology, but layer on so-called redundant systems and more expensive sensors as a safety precaution.

Ramesh Pula, co-chief investment officer at Creative Planning, which owns Tesla shares, said he was impressed by the presentation but “obviously, we were looking for more details on exactly what his future plans are going to be and how he's going to monetize this new AI and robotics.”

In particular, Pula said he expects regulators to pose a “major obstacle” to Musk's plans to transition to unsupervised autonomous driving within the next year. Tesla's current “full self-driving” driver-assistance feature cannot be operated safely without the constant attention of a human driver.

“He showed the prototypes and there's definitely some excitement around it,” Pula said. But widespread adoption of autonomous CyberCabs, where riders can hail a ride through an Uber-style app, is still “probably three to four years away,” he said.

That's not necessarily a bad thing, Pula said, adding that he would tell clients not to sell Tesla stock. “There are lots and lots of ways to monetize this technology,” he said. “CyberCab may not necessarily be next year, but down the road, there is functionality.”

Musk said he plans to operate a self-driving Tesla taxi that passengers can hail via an app. He made no mention of the app at Thursday's event.

Tasha Kinney, director of investment analysis at Tesla investor ARK Investment Management, said she expects more specifics in the app.

However, Kinney said he was encouraged by Musk's timeline to offer an unsupervised version of his fully self-driving system in Texas and California next year.

“If they can do that, I don't see why they wouldn't launch a robotaxi service sooner,” he said.

(Reporting by Chris Kirkham in Los Angeles; Additional reporting by Akash Sriram and Abhirup Roy; Editing by Brian Thevenot, Sayantani Ghosh and Christopher Cushing)