Tesla shares jumped 10% on Monday, lifted by the long-awaited launch of the company’s robotaxi service that CEO Elon Musk has for years championed as a key driver of the electric vehicle maker’s lofty valuation.
The automaker deployed a small fleet of self-driving taxis in Austin, Texas, on Sunday, marking the first time its cars have carried paying passengers without human drivers. The rides were being offered for a flat fee of $4.20 in a limited zone.
The trial’s success is crucial for Tesla as Musk has pivoted the company to self-driving cars and robots, shelving plans for mass-market dominance in the EV space as Chinese competition heats up and demand slows for its aging line-up of models.
“It was a comfortable, safe, and personalized experience,” said Wedbush Securities analyst Dan Ives, who took multiple robotaxi rides on Sunday and has long been a Tesla bull.
“There was a moment where we drove up a narrow road going up a hill with cars parked on both sides with oncoming traffic and people opening their car doors into the road and the robotaxi masterfully maneuvered with patience and safety.”
Industry experts have questioned the efficacy of Tesla’s self-driving technology that depends mostly on cameras and AI, without redundant sensors such as lidar and radar, claiming fog, heavy rain and glaring sunlight can hamper safety.
The company will also have to navigate a new Texas law taking effect September 1 that requires a state permit for self-driving vehicles and reflects bipartisan calls for a cautious roll-out.
If Monday’s gains hold, Tesla – the world’s most valuable automaker – will add nearly $100 billion to its market value of about $1 trillion. The stock has declined about 12% so far this year, dragged down by concerns about demand and brand damage from Musk’s embrace of right-wing politics in Europe and support for U.S. President Donald Trump.
Still, Tesla trades at nearly 149 times forward earnings estimates, far above auto rivals such as Ford Motor at 9.3 and tech giants including Microsoft at 31.6.
