Tesla Inc. on Monday unveiled hardware dedicated to driverless cars at its investor day, with Chief Executive Elon Musk making some bold promises that included the company’s vehicles as “robo-taxis” as early as next year in some locations.
Tesla TSLA, -3.85% shares ended 3.9% lower on Monday, slightly worse off than before the investor day started. The stock was up 0.2% in the extended session.
The future of self-driving cars is hardware, visual recognition, and also a “massive software problem,” Chief Executive Elon Musk said.
Musk also promised Teslas as “robo-taxis” that owners could rent out and defray costs of car ownership. Tesla would be cash-flow neutral as it builds that fleet, and “extremely cash flow positive” after that, he said.
Tesla’s Peter Bannon, vice president of hardware engineering and former Apple Inc. executive, introduced the Full Self-Driving computer, saying that the company set off to work on it three years ago after it realized there was nothing specifically designed for autonomous driving.
The computer will fit behind a Tesla TSLA, -3.85% vehicle’s glove box and hold two independent chips that will run only Tesla-encrypted software.
Musk said that “any part of this could fail and the car (would keep on) driving.”
Musk later on called the computer the “best in the world” and that all Tesla cars have everything necessary for self-driving currently, minus the software. The chips were installed in new Model S and Model X vehicles in March and are being installed in Model 3s now. Samsung Electronics Co. Ltd. 005930, +0.11% will make the Tesla chip in Texas.
Musk took a small dig at Nvidia Corp. NVDA, +1.16% which has made hardware for Tesla, saying it was a “great company” that had too many customers and therefore had to do a “generalized solution.”
Musk also criticized the industry’s reliance on lidar, a common sensor being installed in self-driving test cars such as those by Alphabet Inc.’s GOOGL, +0.99% driverless-car unit Waymo.
“Lidar is a fool’s errand and anyone relying on lidar is doomed. Doomed,” he said, likening it to an “expensive appendix.” Tesla has placed its bets on visual recognition, which Tesla executives said offer a richer picture than lidar points.
Musk said the company is expecting to get some regulatory approval for its self-driving cars, at least in some places, as early as the end of 2020.
Teslas will be “feature complete” for self-driving this year, and Tesla drivers will be ready to get their hands off the wheels by the second quarter of next year, Musk said.
The event was more than a half-hour delayed in starting.
The shares are down 9% in the past 12 months, versus gains of 9% for the S&P 500 index. SPX, +0.10%