- Elon Musk talked robots amid slumping Tesla sales in first quarter earnings.
- Analysts, meanwhile, are focused on cheaper models and robotaxis.
- Tesla's first-quarter profits dropped 71%, with auto revenues down 20% year over year.
Elon Musk made some big, exciting promises to Tesla investors on the company's first-quarter earnings call Tuesday — but he said they won't start paying off until mid-2026 or later.
In the hours after Tesla reported, analysts said they were waiting for two things: a highly anticipated cheaper car and for Tesla's robotaxi to hit the market.
Tesla's robotaxi, which was unveiled in October, is a fully autonomous vehicle that could be hailed on a ride-sharing app like a cab. Tesla has also been teasing a cheaper car — without disclosing its model or features — since 2020.
Tesla missed expectations for the first quarter, reporting a 71% drop in profits and a 9% drop in revenue. Vehicle sales in particular suffered, with auto revenues down 20% year over year and vehicle deliveries down 13%.
The EV maker has faced protests, boycotts, and attacks in recent months over Musk's work with the White House DOGE office. Musk announced on the earnings call that he'd be stepping back from DOGE in May, good news to investors who had been concerned that Tesla wasn't getting enough of the billionaire's attention.
Tesla stock jumped about 5% after hours, but it is down 41% this year.
Cantor Fitzgerald analysts led by Andres Sheppard highlighted the robotaxi and cheaper model in a note following earnings. They added that regulatory approval for full self-driving and robotaxi remains a key risk for Tesla's stock price.
A more affordable model could open up Tesla's potential customer base and help the company compete internationally against low-cost Chinese EVs.
Thomas Monteiro, an analyst at Investing.com, said, "Tesla has room for significant improvement."
"If this is the worst it gets for Tesla, then certainly there must be some upside for the stock once tailwinds, such as the highly-awaited cheaper model and the Robotaxi, finally hit the market later this year," he said in a note following the earnings call.
Yun Mei, an EV analyst at China Great Wall Securities, emphasized the robotaxi business in an appearance on Bloomberg TV on Wednesday.
She said that she has "strong faith" in Tesla's ability to launch robotaxis because Musk's ownership of xAI gives Tesla a "first mover advantage" in the physical AI space. But she estimated that robotaxis would take around three years to pay off.
Tesla has declined offers to pair up with existing ride-hailing platforms like Uber to market its Cybercab business, which could delay its robotaxis becoming mainstream.
In a note published on the day the Cybercab was unveiled in October, Jefferies analysts wrote that Tesla may struggle without a partner like Uber or Lyft.
Tesla's biggest cheerleader said that these product launches require Musk's focus, which has recently been on DOGE.
"This quarter was a disaster," Wedbush analyst Dan Ives said in a Tuesday appearance on CNBC after Tesla's earnings.
"Everything that's going on here in terms of the opportunities around autonomous, lower cost vehicles, Cybercab, everything else — Musk needs to drive that," he added.
Big bets on autonomous driving and robots
Musk also set some lofty goals for Tesla's autonomous vehicles and humanoid robots.
Tesla is trying to diversify as EV sales have struggled. Slowing EV sales were an issue for Tesla even before Musk's work with DOGE, in part because of increased competition and consumers opting for hybrids over fully electric vehicles.
Musk said he expects Tesla to have millions of fully autonomous Teslas on America's streets by the second half of next year.
Musk added that Tesla would "start to see the prosperity of autonomy take effect in a material way around the middle of next year" or the second half of next year.
The company has often missed target dates in the past, and Musk has previously acknowledged being overly optimistic about timelines.
Musk also said Tesla was making good progress on Optimus, its humanoid robot, and it expected to have thousands of Optimus robots working in Tesla factories by the end of the year. He said the company could be producing one million robots a year by 2029 or 2030.
