Tesla's Cybercab Ambitions Hit The Road

TECH IN THE NEWS

Milton Mayhem — 1. Milton could result in losses of up to $100B for insurers, creating a surge in reinsurance prices and firms’ shares. | 2. Millions are left without power. | 3. FEMA only has only $20B in disaster funding.

SpaceX Antitrust — The WSJ reports that SpaceX has used its dominant position in rocket launching to push satellite rivals to share wireless airwaves with Starlink.

AI Nobel Prizes — 1. AI pioneers Geoff Hinton and John Hopfield won the Nobel Prize in Physics | 2. DeepMind’s CEO Demis Hassabis shared the Chemistry Prize with David Baker, of the Institute for Protein Design.

Losses To Triple — OpenAI documents suggest the company could take until 2029 to turn a profit, with annual losses reaching $14B by 2026, ~3× its 2024 deficit.

One SEC — 1. Robinhood's pro-crypto Chief Legal Officer, Dan Gallagher, emerges as a top pick for the SEC Chair spot if Trump is elected. | 2. Crypto.com has sued the SEC after receiving a legal threat from the agency.

COMPANIES TO WATCH

AI Mineral Discovery — Berkeley AI metal research startup Kobold Metals raised $527M at a $2B valuation from Bill Gates, Jeff Bezos, Jack Ma, Andreessen Horowitz, and Breakthrough Energy.

SpaceX VC Spinout — Interlagos, a new VC firm led by former SpaceX execs, is looking to raise $550M to focus on deep tech deals from inception to Series B.

Sierra — Former Salesforce Co-CEO, Bret Taylor’s AI agent startup is close to raising funding from investors including Greenoaks at a $4+ valuation (up 4x).

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THE HOTTEST THING IN TECH
Tesla's Cybercab Ambitions Hit The Road

Elon Musk has unveiled Tesla’s long-awaited steering wheel-free "Cybercab" and RoboVan robotaxis at a demo event showcasing its futuristic vision of autonomous transportation. But don't expect to hail one anytime soon they only go into production in 2026. The event revealed the small, futuristic-looking $30K cab’s self-driving skills in a controlled environment at Warner Brothers studios. Musk also showcased the RoboVan for fleet operators which will carry 20-passengers or cargo at 5c/mile. Musk also outlined a vision for the Tesla Network, in which owners can add their own autonomous vehicles to the robotaxi fleet when they’re not in use.

The Future Is Now (Sort Of)

The Cybercab has a Cybertruck-inspired design, a compact, two-door, two-seater layout with no steering wheel or pedals. It has a running cost of 20c/mile and will only charge wirelessly via induction. It’s designed to be fully autonomous and will feature a ride-hailing app as hinted at during Tesla's first-quarter earnings call. However, this fully autonomous design choice might face serious regulatory hurdles. Musk stated existing models will get Full-Self-Drive (FSD) capability next year meaning a robotaxi service can be rolled out with these models ahead of the full cybercab release.

Musk’s Camera vs. Sensor Tech Gamble

Tesla is betting big on a camera-only "computer vision" and "end-to-end machine learning" approach to self-driving, diverging from rivals like Waymo who use lidar and radar. This cheaper, more scalable strategy dovetails with xAI’s massive investment in compute power. To drive this system, Musk just got approval from Memphis to double the capacity of the ‘Colossus’ supercomputer cluster to 200,000 GPUs, including 50,000 advanced Nvidia H200s. 

But Tesla’s approach raises eyebrows among some experts concerned about safety and troubleshooting challenges. They argue it can lead to Tesla's system struggling with unpredictable "edge cases". More concerningly, the way Tesla’s AI makes decisions is complex and difficult to interpret, leading an ex-Tesla engineer to refer to the technology as a "black box." Also, the costs of sensors and compute could be set to drop significantly with new tech developments. Last week, startup Sonair unveiled its groundbreaking ultrasound tech that reads sound waves to detect people and objects in 3D, with minimal energy and computational requirements.

Market Reality Check

While Tesla stock watchers eye robotaxis as a potential catalyst, analysts remain skeptical whether the announcement will benefit the stock price in the short term. For one, the timing isn’t great. Tesla’s margins have taken a hit over the past year due to ramped up Cybertruck production, among other factors. Q3 deliveries were disappointing, and Tesla has issued its fifth Cybertruck recall within a year of launch. A new vehicle would mean more investment into production lines, factory downtime, and other potentially costly issues. As for the Tesla Semi…we are still waiting.

Garrett Nelson, a senior equity analyst at CFRA Research, told Business Insider that “Tesla still has to surmount "numerous technological hurdles" — not to mention regulatory ones — before it can be a potential competitor to companies like Waymo.” Then there are Tesla's history of delays meaning despite the hype, investors aren’t realistically expecting the cab to meaningfully arrive in the immediate future.

On the more positive side, Tesla bulls will be banking on Musk’s ability to establish a supervised robotaxi network with existing models, before transitioning to a fully autonomous FSD service next year. Tesla's acquisition of Lyft would in fact give it access to valuable data, drivers for a supervised network, and a large customer base. 

The Competition Revs Up 

Key Robotaxi rival Waymo looks on the verge of becoming a viable business for the first time since Alphabet launched the moonshot 15 years ago. It recently hit 100,000+ paid rides weekly with services in four major US cities and a partnership with ride hailing king, Uber. It also now has a deal with Hyundai to include IONIQ 5 EVs into its fleet. Daniel Ho, Tesla’s former head of vehicle programs and new product integration, last week announced his new role as programs director at Waymo.

Meanwhile, Chinese AV leader Baidu is planning to expand its Apollo Go robotaxi service globally, starting in Hong Kong, Singapore and the Middle East. It aims to compete globally with Tesla and Waymo with its cheaper manufacturing costs.   

The Musk Trust Deficit 

As Cory Weinberg points out, one final challenge for Tesla is a trust deficit. Robotaxis are still a new technology that depends heavily on the trust of customers, regulators and other drivers and pedestrians. He, fairly, questions whether Elon Musk still has enough people’s trust to pull this ambitious play off? As history shows, the road from unveiling to reality can be long and winding for Tesla, so watch this space.

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1. 🔥⏱️ Robotics for Agricultural Efficiency - Pittsburgh - Built & deployed robotic hardware for the largest U.S. tree nurseries, reducing costs and increasing efficiency by 50x. Hardware and AI data layer. Beginning to scale globally. Post-revenue, at capacity. (Seed+)
   

2. 🔥⏱️ Quant Trading Software Company - New Jersey - Large-scale automated day-trading algorithm designed for volatile U.S. equity markets. Profitable through extensive backtesting and live simulation. Seeking equity investment for software company.

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