Investing.com -- Tesla (NASDAQ:TSLA) is due to unveil plans for its long-awaited robotaxi offering this week in an event that has whetted investors' appetites and pushed the stock higher.
Shares in Tesla have rallied by more than 43% over the last four months, despite lingering concerns over tepid expectations for growth in demand at Tesla's electric vehicle business. The event was also delayed from early August to give Tesla more time to make tweaks to the robotaxi product and build additional prototypes, analysts at Wells Fargo noted.
Dubbed the Cybercab, the robotaxi represents a new form of automotive transportation that will be able to shuttle people from place to place by itself, according to Tesla Chief Executive Elon Musk.
Musk has likened the service, which will operate on Tesla's own platform and allow owners to place their cars on a ride-hailing network as autonomous cabs, to a "combination of Airbnb and Uber (NYSE:UBER)."
The robotaxi division could fuel a surge in Tesla's valuation to $5 trillion from its current level of roughly $770 billion, Musk has estimated.
Analysts at RBC Capital Markets have predicted that the wider robotaxi industry could generate $1.7 trillion in revenues globally by 2040, with "several players" racing to capture a share of this lucrative market.
As a result, investors will likely be keen for Tesla to reveal more details about the logistics and economics around the robotaxi unit at the much-hyped gathering in Los Angeles on Oct. 10.
"We hope there are in person demos of the latest [autonomous vehicle] tech," the Wells Fargo analysts said.
Tesla also needs to show that its plan to use a combination of cameras and artificial intelligence to drive the cars -- and avoid costly hardware associated with radar and lidar technology preferred by other robotaxi players -- is "sufficient," the analysts argued.
Uncertainty also swirls around the potentially high cash burn of the robotaxi division, how Tesla will spur broad utilization of the service, and the timeline for widespread regulatory approval, they added.
"[W]e'll see if [Tesla] addresses critical [r]obotaxi questions or if the event is just a pep rally for fans," the analysts said.
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