Tesla Stock Falls. The Clock’s Ticking on Robo-Taxis, Says Analyst.

Tesla CEO Elon Musk said that government cuts in support for EV makers could lead to “a few rough quarters.” ((Courtesy Tesla))

Tesla’s ambition to become a leader in robo-taxis, or self-driving cars, has been a key driver for shares of the electric-vehicle maker, but the timeline is still unclear and the clock is ticking, Baird analysts say.

“Robo-taxi [is] the focus but [there is] still some cloudiness,” Baird analysts led by Ben Kallo wrote in a research note shortly after Tesla released its quarterly earnings report late Wednesday. “We are mixed on [Tesla’s] ability to meet its Robotaxi timelines, cost targets, and scale.”

So far, Tesla has performed better than expected despite having extended timelines for fully self-driving vehicles and now Optimus, its humanoid robot, Kallo said. The Elon Musk-led company has so far received a pass due to how ambitious and revolutionary these products could be, according to the analyst. However, the continued sluggishness in the auto business could lead to the focus shifting to the near-term, he adds.

In a call with investors Wednesday afternoon, Musk said that government cuts in support for EV makers could lead to “a few rough quarters”

“We probably could have a few rough quarters. I’m not saying we will, but we could. Q4, Q1, maybe Q2,” Musk said. “But once you get to autonomy at scale in the second half of next year, certainly by the end of next year…I would be surprised if Tesla’s economics are not very compelling.”

Tesla stock was down 6.4% to $311.23 in premarket trading Thursday. Shares initially rose modestly on the report.

Write to Elsa Ohlen at elsa.ohlen@barrons.com