Musk's Cybercab Gamble Will Kill Tesla

This is the most overlooked downside to Tesla's stock since Musk publicly insulted Trump last week. The Cybercab was never feasible until Trump became President.

• Tesla rallied by over 5% yesterday on video clips of Tesla robotaxis doing their first runs in Austin. The Twitter Spaces yesterday were filled with discussions about the event, and the most widely used term was “historic”. There are few “historical” events in an industry as old as the automobile sector.

• Musk delayed FSD Unsupervised until June 22 “tentatively”: After all the excitement, which likely helped Tesla rally back to levels close to where it was before Musk said the US President was in the Epstein files, Musk said FSD wasn’t ready. It needs a “complete rewriting,” which will take another 11 days. This sounds like all the other 10 or more false dawns Musk has signaled about Tesla autonomy since 2016.

• Even if FSD hits Level 4 autonomy, the Cybercab isn’t street-legal: Musk admitted that he dumped the Model 2 concept (the $25,000 compact EV), because it was “silly” and didn’t match “what we believe in”. In other words, Musk bet the farm on a car that isn’t legal by US safety standards, while dumping the original concept that would’ve sold worldwide.

• US federal laws prohibit cars without manual controls: The US Federal Motor Vehicle Safety Standard (FMVSS) is a detailed set of regulations for vehicle design that prohibits cars without steering wheels and pedals. Exemptions can be obtained, but only for testing of up to 2,500 vehicles. Musk said Tesla would be mass producing the Cybercab by late 2025, or be at full production “by 2027”. Only a fool or a carnival barker would state that on a 2024 earnings call, given these restrictions.

• No Cybercab, no new models: The Street sees Tesla selling 2.06 million cars in 2026, a 22% increase over their 2025 estimates of 1.70 million cars. Without the Cybercab—which Musk projected to be selling at around 2 million units after going into mass production—Tesla has no other new models to offer. This assures that Tesla will see another year of sales declines and likely need to raise capital.