Tesla’s Flying Roadster, Robotaxis and SpaceX Merger Buzz: What Investors Need to Know

Tesla is making waves with a new Roadster that promises rocket-powered thrust, while speculation over a potential SpaceX merger and the expansion of its robo-taxi business raise big questions about the company's future. Joining us now to break it all down is Seth Goldstein, Senior Equity Analyst Resources at Morningstar. Thank you so much for being here, Seth. Thanks for having me on, Justine. Definitely. I mean, there's so much to get to here. Tesla just unveiled its long-awaited Roadster with SpaceX-inspired thrusters that could allow it to leave the ground. So from an investor's perspective, do you think this is really a meaningful technological breakthrough or more of a showcase for Tesla's brand, especially because as we know, Tesla's reporting earnings are coming out and we know Elon is doing kind of maybe some stunts, maybe something to try to get Tesla stock, you know a little bit Roadster ahead there. Yeah, so when Tesla made the decision to discontinue its Model S and Model X vehicles, That left them without a true halo vehicle. If you remember, the Model S Plaid version was Tesla's fastest car, highlighted its best engineering, and really showcased Tesla's brand as a unique technological forward-thinking company with cool cars. And without the Model S and Model X going forward, Tesla needed to bring back the Roadster as the car is going to be its unique technology, highlighting top performance. And Tesla aimed to break all world records for acceleration, things like 0-60, break track times with this vehicle. And assuming that the car actually looks like what we saw in the demo event last week, I think this is going to be a hit. this is going to be a car that really showcases Tesla as having top performance. It should be the fastest car in the world when it comes out. And, you know, this is going to really support the brand. Now, I don't expect a whole lot of sales here, so I don't think it's going to be a big needle mover as far as financials, but all automakers like to have a car that showcases their best technology as a way to highlight the brand to more consumers. And I think the Roadster will do just that. Got it. So you think that this really is kind of a new innovation, obviously something they've been working on for a long time, but really now showcasing this, I guess they're targeting it for 2028. You think that this is really a push for this actual car and kind of showing what they can do and less of an investor stunt? Yes. Yes. I think Tesla wanted to have a really fast sports car and have one of the best sports cars on the market for car enthusiasts as a way to showcase the brand. And this is really unique because Tesla is taking SpaceX technology and putting it on a vehicle, which does allow it to do things like temporarily fly if you have that certain package, which may not be street legal, but it does also have really good grip, which means if you're a car enthusiast who likes to drive on a track, it should be able to take corners faster, should be able to accelerate very fast and really just highlight Tesla as making one of the fastest cars or the fastest car in the world, which I think is a positive for a lot of big car enthusiasts, but it certainly makes noise. And it's something that's unique and different that's not available today that highlights Tesla as a technology company that makes cool cars. Yeah, it definitely is a unique offering that we're not seeing anywhere else right now. And talking about some of those features that it could have with some of these space thrusters from SpaceX. It's now kind of reigniting the speculation about a potential merger between Tesla and SpaceX. So do you think that this deal is something that we're going to see coming down the line? Or do you think that that's just speculation right now? Well, ultimately, if Elon Musk wants it to happen, then I think we could see the deal move forward. But I think there's some regulatory concerns that could potentially hold up the deal. I don't think the U.S. government would be too happy having one of its key defense contractors in SpaceX having Chinese manufacturing assets, and I don't think the Chinese government would be too happy to have a U.S. defense contractor having manufacturing assets in its country. So I do think Tesla's China operations, which are key to its auto and battery businesses today, could be a potential holdup for the deal. But ultimately, if Elon Musk wants to make it happen and wants it to move forward, I think that he would be able to overcome regulatory hurdles, structure a deal in a way that it makes sense, and the companies would move forward. Alternatively, we could see Tesla and SpaceX just continue to pursue joint ventures with each other and continue to integrate more and more of their products and technologies together without having a full merger. And if the regulatory hurdles are too much for what Elon wants to do, that could be an option going forward as well. Yeah, it's really interesting to look at that governance side of things, the regulation side. And if this is something that Elon wanted, could he actually make it happen? So such an important part of all of this. When you look at Elon Musk's companies, I mean, they're increasingly focused on AI, robotics, computing, infrastructure. So do you think that if Tesla and SpaceX did come together, that it would really help accelerate all of those initiatives? Or do you think it would really mean for Tesla's businesses as they move forward, whether it's Tesla with SpaceX or with any of his other kind of companies moving forward together? Yeah, I think Tesla and SpaceX are very complementary of each other. Tesla does a lot of the engineering and design work that I think would be really useful to SpaceX for something like making the casings and making some of the technologies to either support space data centers with things like solar panels and batteries, or to also make sure that the Starship can maximize its capacity of what it can carry into space. And on the SpaceX side, SpaceX has the Starlink telecommunications system that I think will be vital for Tesla's autonomous vehicles, whether that's robo-taxis, whether that's semi-trucks, or whether that's launching the unsupervised full self-driving. For consumers, you need to keep the vehicle connected in order to make sure that the technology is working with the latest road hazards, make sure the mapping is correct. And I think that could be a big benefit to Tesla partnership with Starlink. So I do see the companies, you know, Grok is going to be a big part of both the Optimus robot and Tesla's autonomous driving. And so I see the companies coming together more and more integrating their operations because they have very complementary products with one another. Yeah, they really do. I mean, they seem like they're so intertwined, whether an official merger actually ever happens or not. They obviously are so intertwined anyway. Looking a little bit more broadly at kind of EV adoption, talk to us a little bit about what we're seeing there, right, with some mass auto loan defaults, but then also people still getting their Tesla cars. What are you seeing when it comes to electric vehicles right now? Yeah, we're kind of seeing a shakeout from the expiration of the EV federal tax credit throughout 2026. So EVs in the U.S. will be down if you look at the total volume of sales, but we are seeing green shoots that I think support higher long-term adoption. First, we're seeing Tesla's vehicles continue to do well in the US. The Model Y is still very popular. We're seeing Rivian launch its new lower cost R2 vehicle. There's been enthusiasm for that as well. And so I think what we're really going for is an early market that's driven by things like subsidies. And we're seeing it go to a more mature market, which is what we're seeing in countries like China and markets like Europe, where there aren't as many subsidies anymore. and the technology has to stand on its own and give consumers a choice for an EV versus a truck combustion engine at a similar price. The EV has to have long range and there has to be adequate charging. And so as we see more low priced EVs in the US and we see more fast charging infrastructure get built out, I do think that EVs will start to see greater adoption even without the tax credit going forward. Yeah, that tax credit was such a crucial kind of piece of all of this, but interesting to think about where this is going even without that. Looking now at robo-taxis, I mean, Tesla's been working to expand its driverless ride-hailing service for a long time now. They also are dealing with, again, their own regulatory issues, but also competitors like Waymo. So where do you think Tesla is fitting in when it comes to this kind of robo-taxi build-out with everything going on regulatory-wise and also with competitors like Waymo? Yeah, so right now, Tesla is taking a very slow approach and they want to make sure that technology works and it's safe, which I think is the essential step for any robo taxi company, making sure that the technology works. Tesla launched the Cybercab at Austin, plans to launch the Cybercab in Dallas. And I think Tesla is looking here to not just expand to as many cities as possible as fast as possible, but to make sure that they can take over one market at a time at a more measured pace. But, you know, if we look five, 10 years from now, I would expect Tesla to be in nearly every major city in the U.S. with this robo taxi operations well underway. And so long term, I still think Tesla and Waymo will be market leaders for ride hailing and be able to drive adoption in many U.S. cities because the robo taxis will oftentimes be cheaper and just as safe, if not safer than human drivers. Yeah, I mean, again, so important as people start looking at these cars as an alternative to taking a car with a driver or driving themselves. So we have a lot to watch there. Lastly, when you think about all of these different things we've been talking about, the Roadster, the robo taxis, humanoid robots like Optimus, all of this and all of kind of Tesla's bigger vision. How should investors really separate the company's near term automotive performance and what's happening basically now from its longer term AI and robotics potential and everything that everyone's so excited about for the future? Well, I think investors need to focus on what the business is doing today. Are deliveries growing? Is there a sign that Tesla still has a strong brand and there's enthusiasm for its full self-driving products in the market? We've seen deliveries hold up remarkably well, growing in the first two quarters. Now, the third quarter of this year, they were down 2%, but that was the lap of the federal EV tax credit push last year that really saw record deliveries in the US for EVs across all automakers. And so down just 2%, I think, is still a pretty strong number for Tesla. And then you look at, is Tesla making progress on the new ventures? So is the robot taxi continuing to expand? Cybercab was launched. We have seen the robot taxi in multiple cities now. And then is Tesla making progress on Optimus? Tesla is starting to mass manufacture the robots, and it wants to train thousands at a time to perform different tasks. And so here Tesla is taking a long-term approach of saying, let's not just release a robot that can do one or two things. Let's wait till it's a full product that we can sell thousands of them to another manufacturer or a logistics operation and be able to deploy them at scale. And so as long as Tesla continues to make progress on these things, I think that will support the stock. Yeah, I think that looking at what progress is happening right now is so important so people don't get lost in all of the excitement that's coming down the line, really paying attention to what's actually happening today. Thank you so much for breaking this all down for us, Seth Goldstein, Senior Equity Analyst Resources at Morningstar. We really appreciate your time today.