Can Tesla Robotaxi, Google Waymo Replace Lyft And Uber? Former Exec Says 'These Things Are Expensive...'

Emil Michael, former chief business officer at Uber Technologies Inc. UBER recently expressed skepticism about the financial feasibility of robotaxis, citing the high cost of production.

What Happened: Michael shared his views on how long it will take for autonomous taxis to become a reality during Monday’s episode of CNBC’s “Last Call.”

“It’s always around the corner, but it takes more than people think…because of regulation, the cost of the vehicles that do it well, and also the density of enough driverless cars in any city to have a ride take 10 minutes or less to get to your door when you order one,” Michael said.

“These things are expensive. The Waymo cost of that whole vehicle… is about $300K. That’s not going to replace a driver financially anytime soon.”

Michael’s comment comes from growing interest in and investment in the autonomous vehicle sector, with companies like Tesla Inc. TSLA and Uber betting on the future of robotaxis.

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Why It Matters: Recent analysis has pointed to a lower valuation for Tesla’s robotaxi segment, with RBC Capital Markets reducing its price target for Tesla based on this adjustment. The firm cited lower robotaxi pricing assumptions and a larger revenue share going to service providers like Uber and Lyft as factors in its revised expectations.

Meanwhile, Uber remains a top pick for travel and transportation stock, with BofA analyst Justin Post echoing Michel’s sentiments that the industry is years away from total autonomous vehicles being a viable and reliable nationwide ride-sharing solution. According to the analyst, increasing competition in the autonomous vehicle industry could be a long-term positive for Uber.

Moreover, existing autonomous taxi services like that of Alphabet Inc‘s GOOGL GOOG Waymo have been praised for navigating through complex urban landscapes while also drawing scrutiny for traffic violations and collisions.

However, the high cost of producing autonomous vehicles, as highlighted by Michael, could pose a significant challenge to the widespread adoption of robotaxis. This concern is further underscored by General Motors’ GM recent announcement of an $850 million investment to cover operating costs at its loss-making Cruise self-driving unit.

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Image generated using AI via Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari