Tesla (NASDAQ:TSLA) robotaxi service, tentatively set to launch June 22, 2025, lags behind Waymo’s established operations, which deliver 250,000 weekly rides across multiple U.S. cities. Elon Musk’s cautious approach, driven by safety concerns, has delayed the rollout of Tesla’s robotaxi service. However, Tesla’s long-term strategy could position it to overtake competitors.
Waymo, backed by Alphabet’s $5 billion investment, relies on LiDAR and high-definition mapping. Tesla, by contrast, uses a vision-only system with cameras, aiming for a 30-40% cost-per-mile advantage, according to ARK Invest. This efficiency and Tesla’s vertical integration seek to drive scalability. Superior scalability could result in the robotaxi service representing 90% of Tesla’s enterprise value by 2029, per ARK’s projections.
Tesla’s initial launch will be modest, using 10-20 Model Ys in a geofenced Austin area with remote supervision, resembling Waymo’s early steps. Critics note that Tesla’s full self-driving system faces regulatory scrutiny, and its safety data trails Waymo’s.
Yet, Bloomberg notes Tesla’s 3 billion miles of FSD data could fuel rapid improvements, especially if regulations loosen. While Waymo leads in operational experience, Tesla’s cost-driven model could disrupt the market. The June launch, though small, is a critical step.
If Tesla refines FSD and scales efficiently, it could transform from a latecomer to a leader in the robotaxi race. However, a new risk to the success of Tesla’s robotaxi service has emerged this year: Musk’s public image.
What To Watch Today
Earnings
Economy
Market Trading Update
Yesterday, we discussed Friday’s market selloff and the potential risk from the Israel-Iran conflict. Apparently, the market has already decided that it is no big deal and rallied sharply off the 20-DMA at yesterday’s open.
While the market had violated the rising trend line from the previous test of the 200-DMA, the pullback was just enough for “buy the dippers” to step in. However, the market remains overbought on a short-term basis, and with buybacks starting to fade into earnings, there is a risk of an ongoing consolidation over the next few weeks.
However, the trade to watch is the US Dollar. Every Wall Street firm’s consensus trade is “short dollar,” and in Bob Farrell’s famous words, “when all experts agree, something else tends to happen.” As such, when the dollar deviates significantly below the 200-DMA and is oversold on many levels, it has historically marked a bottom.
Such a combination of conditions has led to a significant counter-trend rally in the dollar. If that rally occurs, forcing shorts to cover, the rally could be pretty substantial.
A rally in the dollar could significantly impact various areas of the market as foreign inflows reverse to gain dollar exposure. While a weaker dollar supports dollar-denominated assets like commodities, a strong dollar should provide a strong bid for Treasuries.
It is worth watching the dollar as a significant trading opportunity is likely building there.
Geopolitical Conflict Boosts the Energy Sector
The outbreak of conflict between Israel and Iran last week boosted oil prices amid targeted attacks. The price of Brent Crude has since pulled back from its peak. Nonetheless, the increase boosted the energy sector compared to last week, when it was the most oversold sector versus the S&P 500. The table below from SimpleVisor shows that energy is now the second most overbought sector compared to the index.
However, none of the sectors are particularly overbought on an absolute basis as the market recovers from last week’s slight drawdown due to the conflict.
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