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Wall Street calls Tesla's autonomous plan 'half-baked,' doubts it can beat Lyft, Nvidia and Google

Key Points
  • On Tesla Autonomy Investor Day, CEO Elon Musk was all too confident about carrying out autonomous robotaxis next year.
  • Wall Street analysts believe the technology is still far from ready and it puts Tesla in a risky position to compete with leaders in ride-hailing and software industries.
  • "We see a significant amount of technology and execution risk in the shift in strategy from competing in just electrification to Tesla also beating Nvida in hardware, Google in software, and building a better ride-hailing service than current ride hailing leaders," Cowen analyst Jeffrey Osborne says.
Tesla CEO Elon Musk speaks during the unveiling of the new Tesla Model Y in Hawthorne, California on March 14, 2019.
Frederic J. Brown | AFP | Getty Images

Tesla CEO Elon Musk touted robotaxis by 2020 on "Tesla Autonomy Investor Day, " and Wall Street was not impressed.

At the company event Monday, Musk was all too confident about carrying out autonomous robotaxis next year, even predicting that Tesla will be making cars with no steering wheels or pedals by 2021. However, analysts believe the technology is still far from ready and it puts Tesla at a risky position to compete with leaders in ride-hailing and software industries.

"We see a significant amount of technology and execution risk in the shift in strategy from competing in just electrification to Tesla also beating Nvidia in hardware, Google in software, and building a better ride-hailing service than current ride hailing leaders, " Cowen's analyst Jeffrey Osborne said in a note on Tuesday.

"The Tesla Network robotaxi plans seemed half baked, with the company appearing to either not have answers to or not even considered pretty basic question on the pricing, insurance liability, or regulatory and legal requirements," Osborne added.

The event came two days before Tesla is scheduled to report first-quarter earnings. Shares of Tesla are down 0.5% in morning trading on Tuesday. The stock has fallen 21% year to date amid the company's legal woes, disappointing deliveries and slowing demand.

Here's what else analysts are saying about Tesla's Autonomy Investor Day:

Morgan Stanley's Adam Jonas

"Tesla's autonomy investor presentations conveyed impressive technological leadership but, in our view, left big questions around time-to-market and did not change our views on the impediments to removing the human driver in a commercial service at scale. Attention returns to a challenging 1Q....More data to back up safety claims is needed....We still think removing the safety driver will take many years (if not decades) to achieve at high scale."

SunTrust's Willian Stein

"We are concurrently skeptical and hopeful about TSLA's claims. If TSLA executes to plan, implications across semis/components are meaningful: positive for analog/mixed signal vendors, mixed for digital vendors, negative for LiDAR vendors.... Investors should recognize that, if the company achieves its autonomous driving goals, combining this with its already-achieved EV technology conspire to establish a ride hailing service that could be quite financially compelling to both the car owner and the rider."

Oppenheimer's Colin Rusch

"TSLA hosted its analyst day yesterday and may have fundamentally changed the metrics by which it is evaluated over time. With management promising full self-driving capability rolled out to its entire fleet produced after 2016 by mid-2020, we believe Bulls will focus on the company's estimated NPV of $200k/robotaxi, a 5x-6x ROI on each vehicle it produces. We believe core to its IP position is the accelerated learning cycles allowed by the volume of TSLA vehicles on the road and its data capture/ integration system. We believe TSLA's ability to iterate its solution is a material advantage and if its technology performs as guided, it will have a defensible cost advantage in EV/automous vehicles even as it works through financing details over the next few years."

— CNBC's Michael Bloom contributed to this report.