Electric vehicle (EV) and robotaxi company Tesla (TSLA +2.93%) and its CEO, Elon Musk, have had a volatile year, with Musk often finding himself under a controversial spotlight and investors and analysts torn on Tesla's future. On one hand, the company has tremendous potential with all of its future initiatives, but on the other hand it trades at a meteoric valuation. The stock is down about 13.3% (as of July 21), significantly underperforming the broader market.
Meanwhile, another artificial intelligence (AI)-powered transportation stock has rocketed higher this year, partly due to its emerging autonomous driving business. Lately, the stock seems to go up when Tesla goes down and vice versa. Is it the ultimate threat to Tesla's autonomous driving ambitions?
Different ways of approaching autonomous driving
The ride-hailing giant Uber Technologies (UBER 1.93%) isn't taking the traditional approach to autonomous driving, in that it isn't embarking on the complex journey of building its own autonomous-driving technology like Tesla. Rather, Uber is pitching other autonomous-driving companies to bring their autonomous vehicles to Uber's platform. Because of Uber's massive platform, operational excellence, and regulatory experience, Uber views it as an ideal partner to a new market with an opportunity well over $1 trillion.
Image source: Getty Images.
While Uber at one point listed Tesla as a potential partner, Musk has thus far been pretty clear that he thinks Tesla can go it alone.
Tesla is building a Model Y that can join its autonomous fleet. Musk also envisions incorporating an aspect to Tesla's future robotaxi fleet that would allow people who own Teslas to essentially rent their vehicles to the fleet and earn income from doing so. Although it's still early innings, if Tesla can perfect autonomous driving, it could pose a threat to Uber's market dominance.
However, Uber has formed several partnerships with autonomous companies like WayMo, WeRide, and Pony AI and launched pilot programs in several major cities.
Uber stands to benefit because adding autonomous vehicles to its fleet could eliminate the cost of many human drivers, which would lower the company's expense base. Gary Black, managing partner of The Future Fund, touched on this aspect in a recent post on X, and also noted how shares of Uber and Tesla have traded since the launch of Tesla's robotaxi pilot in Austin, Texas.
$UBER continues to outperform $TSLA (YTD $UBER +51%, TSLA -21%) as the race for autonomy heats up. The investment thesis for $UBER is that UBER benefits most as autonomous tech advances since it allows UBER to eliminate the cost of a driver from the cost of ridership, which... pic.twitter.com/xmoEU7g3Pj
-- Gary Black (@garyblack00) July 17, 2025
Is Uber an existential threat to Tesla?
Many experts believe the autonomous transportation industry will be big enough for several winners. However, considering that the ride-hailing industry is dominated by Uber and Lyft, it's also not unreasonable to think that it could eventually turn into a zero-sum game at some point, ratcheting up competition between Uber and Tesla.
Tesla certainly can succeed, considering it's one of the few companies starting to mobilize autonomous driving. Tesla is also in a strong position to scale its fleet if it gets the technology right. Furthermore, many experts believe Tesla has a big cost advantage in producing its driverless vehicles. According to Bloomberg, the cost of Tesla's Model Y, which is being deployed as an autonomous vehicle, is just 1/7 the cost of Waymo.
Again, it's still early. Tesla has really only done a soft launch of its robotaxis and they are reportedly being monitored by humans remotely. There have also been reports of accidents, so Tesla does not appear to have perfected the technology just yet.
Uber definitely poses a threat to Tesla because of its partnerships and the progress its partners are making. But Tesla is still very much in the game and many have named it the company to catch in the autonomous space. There's also the possibility that the two companies end up partnering together if the industry proves to be difficult. Musk wants to build out Tesla's robotaxi fleet and the platform from the ground up, but Uber is still likely open to a partnership.
