The transportation industry has gone through a notable shift. In the past decade, we've seen electric vehicles take market share. This has been pioneered by Tesla (TSLA 2.97%), which launched innovative new cars.
The investment community has extremely high hopes for the Elon Musk-led enterprise; its market cap is a mind-boggling $1.3 trillion. And the current price-to-earnings ratio of 382 is in the stratosphere.
Perhaps it's time for Tesla investors to check their expectations, though. The CEO of a rival company just delivered some sobering news.
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Listen to the leader of the ride-hailing market
Thanks to the advent of the mobile internet age, Uber Technologies (UBER 2.83%) was introduced to the world. It's the clear leader in the ride-hailing market, with 202 million monthly active users and 3.8 billion trips completed in Q4 (ended Dec. 31). Given that it moves so many people around every day, Uber is at the forefront of changing tech, particularly around autonomous vehicles (AVs).
Uber's CEO, Dara Khosrowshahi, mentioned that by 2029, Uber will be the largest facilitator of AV trips in the world. He also said, "Autonomous vehicles are likely to remain a very small portion of the rideshare category for many years to come."
NYSE: UBER
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Tesla has several checkpoints to clear
This deals a blow to the hearts of Tesla shareholders. The vast majority of the EV maker's sky-high valuation is attributable to what it could become in the future, not what it is today. One of Tesla's goals is to launch its robotaxi fleet all across the world in the hopes of bringing in high-margin and recurring revenue.
Tesla bulls who want the business to make rapid progress toward its AV ambitions now have a lot to think about. At the end of last year, Tesla's robotaxis were operational in Austin and the Bay Area, so it's not like there is too much to be excited about here. And a lot still needs to be achieved in terms of technical, regulatory, and safety challenges.
NASDAQ: TSLA
Key Data Points
On the other hand, through its partnerships, Uber was in seven markets as of Dec. 31. And it plans to launch in eight more cities in 2026. Its advantage comes from its massive user base and network effect, which make it a powerful demand aggregator that AV companies looking to scale up quickly can appreciate.
Looking ahead, Khosrowshahi firmly believes that a hybrid system, consisting of both AVs and driver-enabled rides, will exist, since demand is constantly fluctuating. This plays to Uber's benefit.
Investors now have a fresh perspective on the state of AVs. While this might lead to a more bearish view of Tesla, it should undoubtedly support the bull case for Uber.
