Tesla’s humanoid robot is not making a good first impression on Wall Street

Tesla Inc. shares were holding on to small gains a day after the company held its much-anticipated AI Day, which included the surprise reveal of a human-shaped robot one analyst called “an absolute head scratcher.”

Tesla TSLA, +1.01% shares were up less than 0.5% Friday, poised to end the week down more than 5%. That would be their worst weekly losses since the week ended May 14, when they lost more 12% as Chief Executive Elon Musk announced that the company was halting car sales with bitcoin.

Details around manufacturing and target volumes for the “Tesla Bot” were limited, with Musk targeting the launch for 2022.

That “seems optimistic,” Wells Fargo analyst Colin Langan said in a note Friday.

Excitement about the reveal could provide a near-term boost for the stock, but the ramp of Tesla’s new Austin and Berlin plants, regulators’ investigation into its advanced driver-assistant system, Autopilot, and possible U.S. EV credits “to be more relevant midterm drivers,” he said.

Tesla touted the AI event as an artificial-intelligence showcase as well as a recruiting event, with Tesla also highlighting its Dojo supercomputer, which the company plans to use for AI training. At the event, Tesla also unveiled a new in-house computer chip that will run on Dojo.

“Much of Tesla’s AI architecture is dependent on Dojo … (which) Musk says will be able to process vast amounts of camera imaging data much faster than existing computing systems,” Wedbush analyst Dan Ives said in his note.

In theory, Tesla’s AI capabilities will “enhance and improve” its autonomous system with hopes that Dojo will be operational next year, he said.

With Tesla “under major scrutiny” for safety issues around Autopilot and a future full autonomy, the company “recognizes there are deficiencies in its current process” before it can arrive at true autonomous driving, he said.

“The safety issues on self-driving remain a concern for investors that has gained steam over the past week representing another overhang for the stock,” Ives said.

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That humanoid robot?

It is “another sci-fi project for Musk,” Ives said.

“Unfortunately, as we have seen with robotaxis and other future sci-fi projects for Musk we view this Tesla Bot as an absolute head scratcher that will further agitate investors at a time the Street is showing growing concern around rising EV competition and safety issues for Tesla.”

Musk is known for his bold claims that don’t always pan out, and in April 2019 said he envisioned a fleet of Tesla robotaxis as early as this year.

Earlier this week, federal regulators announced the launch of another investigation into Autopilot, this time following several crashes involving parked emergency-response vehicles and emergency scenes.

The regulators have opened several investigations related to Autopilot, including some crashes that resulted in deaths. Alleged Autopilot malfunctions have sparked more than a dozen lawsuits in the U.S.

Also on Monday, two U.S. senators called on the Federal Trade Commission to look into whether Tesla misleads consumers by inflating Autopilot’s capabilities.

Tesla has long said Autopilot makes driving safer, and that it makes it clear that drivers have to be alert and prepared to take over at any time upon engaging Autopilot.

Musk said during Thursday’s presentation that Autopilot’s basic purpose is to avoid crashes, and said it does that very well.

Tesla shares have lost about 4% this year, contrasting with gains of around 18% for the S&P 500 index. SPX, +0.81%

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