The Ark Invest founder got the rise of EVs right, but Elon Musk is absent from the autonomous vehicle market she saw coming.
(Bloomberg) — In February 2017, Cathie Wood went on Bloomberg Television to make her case that the $10 trillion global mobility market would be severely disrupted by electric vehicles and networks of autonomous taxis. Tesla was “leading the charge” in EVs and had its eye on robotaxis, she said.
This half-right assessment helped turn Wood and her firm, Ark Invest, into household names. The shift to batteries from combustion engines has been hugely disruptive to the auto industry, and Tesla remains the global EV leader.
Setting up networks of autonomous taxis, on the other hand, has proven far more difficult than Elon Musk and others expected. Alphabet spinoff Waymo and General Motors-owned Cruise have set up small fleets of driverless vehicles in select cities, but the scores of robotaxis Tesla’s chief executive officer promised years ago are still missing.
Wood is undeterred. During a Bloomberg Intelligence webinar on Wednesday, she predicted EV sales will go to 60 million in five years, three times more than what she said is the consensus estimate. She described Tesla’s plans for autonomy as much more important than its EV strategy. About two-thirds of Ark’s $1,500 price target for the shares over the next five years — the stock trades around $200 now — is because of autonomy.
Wood even used the same phrase she did six years ago: “Tesla, from a thought leadership point of view, is leading the charge, so to speak, in this movement toward autonomous electric vehicles,” Wood said.
While Musk has indeed done a lot of thinking about autonomy, Tesla isn’t leading in the field. Human drivers remain responsible for operating its vehicles at all times, including once they’ve engaged a product the company has marketed for years as Full Self-Driving Beta, or FSD Beta. Tesla acknowledged as much one week ago when announcing a recall of what it called a driver-support feature.
In its recall report, Tesla said it disagreed with an analysis by the National Highway Traffic Safety Administration that had identified concerns with how FSD Beta handled certain roadway environments.
The filing is curiously worded. It refers to Teslas traveling through “a stale yellow traffic light,” which at least suggests cars using FSD Beta may be running through red lights. It also refers to “the perceived duration of the vehicle’s static position at certain intersections with a stop sign, particularly when the intersection is clear of any other road users,” which is a long way of saying Teslas at least appear to be performing illegal rolling stops. Tesla filed a recall notice a year ago to address this via an over-the-air software update.
Teslas also may be speeding through certain zones, either based on speed limit signage detection or a “speed offset setting” that is adjusted by the driver, according to the company. It’s unclear from the recall report whether there’s a flaw in Tesla’s speed limit sign detection system, or if it will no longer allow drivers to exceed speed limits while using FSD Beta. The company expects to deploy another over-the-air update in the coming weeks.
Days after Tesla announced the recall, NHTSA was asking the company for more information about a fatal crash involving one of its vehicles in California. It’s clear why the incident was of interest to the agency — the Tesla collided with a Contra Costa County fire truck, which is consistent with an 18-month-long investigation into whether the company’s Autopilot system is defective in how it handles crash scenes with first-responder vehicles. It’s unclear whether the driver in the crash was using Autopilot.
Teslas are being used in a taxi service run by another one of Musk’s enterprises. But while The Boring Company’s Vegas Loop is a closed course that would seem to lend itself well to a robotaxi pilot, human drivers have remained behind the wheel.
It’s hard to argue with Tesla’s leadership in EVs that sent its shares soaring and made Wood and Ark avatars of the pandemic-era stock boom. To be proven correct on the other half of her thesis, though, Wood will need Tesla to overcome rising skepticism among consumers and regulators who’ve accused the company of overselling its technology.
If the doubters are proven right, Wood’s devoted followers have a lot to lose: Tesla is the largest holding in her Ark Innovation and Ark Autonomous Technology & Robotics exchange-traded funds.
–With assistance from David Ingles and Rebecca Sin.
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