Why Tesla Is Likely To Dominate Robotaxi Market Despite Google's Waymo And Baidu Holding First-Mover Advantage, Explains Ark Analyst

Even as Tesla, Inc. TSLA prioritizes its robotaxi operation, frontrunners such as Alphabet, Inc.‘s GOOGL GOOG Google-owned Waymo and Baidu, Inc. BIDU have made rapid strides on this front. Ark Invest analyst Tasha Kenney weighed in on Tesla’s core competencies as the electric vehicle maker gears up to compete against rivals.

Market Vibrant: “We're excited to see Baidu and Waymo scaling their robotaxi operations,” said Kenney in the firm’s weekly innovation newsletter “Ark Disrupt.” She noted that Waymo said last week that its sixth-gen robotaxi developed by Geely Automobile Holdings Limited’s GELYF Zeekr will cut the number of onboard cameras from 29 to 13 and lidar sensors from five to four compared to the hardware on Waymo’s Jaguar I-PACE.

The Ark Invest analyst expects the cost of the new vehicle to be much lower than the rumored $100,000+ for the current model. This is a critical step toward scaling operations, she added.

Waymo has ramped up autonomous rides per week to more than 100,000, Kenney noted. The analyst said she tested Waymo’s service in Los Angeles and was impressed by the smooth ride.

China’s Baidu, which has a thriving robotaxi operation in China, said during the second quarter earnings call that its autonomous ride-hail platform, named Apollo Go, averaged 75,000 rides per week, Kenney noted. This is despite the company currently operating 100% of its fleet in Wuhan, with a small fleet of about 400 vehicles, she said.

The Baidu management signaled that it would take years for it to roll out nationally and gain a significant share of the ride-hail market, she added.

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Tesla’s USP: Waymo and Baidu may have the first-mover advantage in robotaxi operations, but Tesla is training its autonomous system with about 70 times more data, Kenney said.

“As will be the case with most AI (artificial intelligence) projects, Tesla's data scale advantage is likely to lead to commercial dominance in this "winner-takes-most” opportunity,” she said.

Black Weighs In: Tesla bull and fund manager Gary Black has a different take. He took potshots at Tesla bulls, who keep on bashing Baidu and Google’s Waymo despite both completing 7 million and 2 million rides, respectively. In contrast, Tesla hasn’t completed a single unsupervised robotaxi ride yet, he noted.

“TSLA bulls should be cheering for BIDU and GOOG for the greater good of autonomous driving,” Black said.

The fund manager said Tesla’s generalized “works anywhere” autonomous solution is by far the better, more scalable and more profitable strategy. That said, Baidu and Google robotaxi networks are “already up and running with millions of drives and miles of data and now need to scale across their respective markets to be profitable,” he said.

“All three companies will be there in the end.”

Why It’s Important: Tesla has scheduled a robotaxi unveil event on Oct. 10, and more details could be announced at the event. Ark’s valuation framework suggests Tesla will hit a stock price of $2,600 by 2029, with the bulk of the value added by the yet-to-be-launched robotaxi service.

For a successful robotaxi operation, full self-driving is the key. Tesla is currently marketing its FSD as Fully Supervised.

In premarket trading, Tesla shares rose 0.23% to $213.70, according to Benzinga Pro data.

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