National Business

At Tesla annual meeting, Elon Musk softens claims of a robotaxi fleet next year

Less than two months after touting a plan to put driverless taxis on the road, Tesla Chief Executive Elon Musk on Tuesday walked back the ambitious timetable.

On April 22, just days before Tesla turned to public markets to raise $2.3 billion in debt and equity, Musk had announced at an event called Tesla Autonomy Day: "Next year for sure – we'll have over a million robotaxis on the road."

Existing Tesla owners could download software and turn their electric cars into moneymaking driverless cars, he said. Their cars would appreciate in value, Musk said, so owners would make more money selling their used car than they'd paid for it new.

On Tuesday, speaking to shareholders at the company's annual meeting, Musk hedged his earlier statement, saying Teslas would be "capable" of such driverless operation. "We will have a million cars capable of self-driving" next year, he said. "We'll still need regulatory approval.

"We could practice a rideshare fleet with people and then, um, that would be good for figuring out things for the robotaxi fleet in the future. So that might make sense. Sort of a supervised robot taxi."

Executives in the driverless-car industry had been highly skeptical of Musk's original announcement, saying such robotaxi fleets won't be practical for many years.

The shareholders meeting came as Tesla finds itself at yet another crossroad. After lifting investor hopes late last year with a rapid rise in sales of its latest sedan, the Model 3, and two consecutive profitable quarters, Tesla in the first quarter saw sales of all three of its models plummet, most of all the high-margin luxury Models S and X.

The company, with only four profitable quarters in its 16-year history, posted a net loss of $702 million in the first quarter. Revenue fell to $3.7 billion from $6.3 billion in the previous quarter, the fourth quarter of 2018. The company sold 63,000 cars, down from 90,700. Scarce cash got scarcer, dropping to $2.2 billion from $3.69 billion.

Sales rose somewhat from April to May, as Tesla cut prices. On Tuesday, Musk insisted that brighter days lie ahead.

"I want to be clear, there is not a demand problem," he told shareholders. Underlining his earlier guidance that at least 90,000 cars will be sold in the second quarter, which ends this month, he said, "We have a decent shot at a record quarter on every level. If not, it's going to be very close."

The stock market remains dubious. Tesla shares are down about 38% from their year-to-date high of $347.26 on Jan. 11. On Tuesday, they rose 2% to $217.10.

Musk also obliquely warned shareholders not to expect near-term profits. He said he aims to lift Tesla vehicle sales by 60% to 80% this year, after doubling them last year. But he added, "It's hard to be profitable with that level of growth. We could slow it down, but then that would not be good for sustainability and the cause of electric vehicles."

Somewhat obscured by the drama over falling car sales is Tesla's solar energy unit. Revenue for both solar panels and storage batteries is down, as Tesla continues to shrink its solar business. Battery sales haven't met objectives.

Musk said the company is working on a third version of its solar roof, which is basically solar cells built into attractive roof shingles, rather than conventional bulky solar panels. Musk announced the product to great fanfare on a movie set at Universal Studios in late 2016, weeks before Tesla bought financially troubled SolarCity with Tesla stock. The solar roof is still not widely available.

"I'm really excited about Version 3," Musk said. "We have a shot at being equal to a competitive shingle roof plus someone's utility costs or maybe lower than that, one of the cheapest roofs available. If you could have a better product at a lower price, obviously it will take off like crazy."

He offered no timeline.

After he spoke, Musk took questions from the audience. Three shareholders complained about media coverage of the company, to the point where, one said, "people think you're on the verge of bankruptcy."

"We're not," Musk said.

"Perhaps the biggest challenge in the media is there doesn't seem to be anyone pointing out what other media is doing," one shareholder said. He suggested that Musk enlist media mogul and clean-energy advocate Michael Bloomberg to host a conference and set things straight.

The company responds to media inquiries and attempts to rebut false information, Musk said. "It's not like we don't respond or anything," he said.

Asked why Tesla doesn't counter critics with advertising, Musk said, "I've had an aversion to advertising because there is too much trickery in advertising."

  Comments