Amazon Is Starting to Put Tesla in the Rearview Mirror

Investors can’t really be blamed if they’re thinking, “New year, new ambitions, but same Tesla (TSLA +1.98%).” For all of the impressive feats Tesla has achieved, and there are indeed many, the company does still have a trend of overpromising and underdelivering.

That seems to be ringing true with the electric vehicle (EV) maker’s driverless vehicle program in Austin, Texas, where Amazon (AMZN +1.55%) just announced it would begin testing its purpose-built robotaxis in a year of growth.

The great expansion race

Amazon’s Zoox will start testing its robotaxis in Miami and Austin as part of its coast-to-coast expansion in what the company calls a year of growth. “This expansion marks a significant step forward for Zoox and is driven by insights from our early deployments,” said Zoox CEO Aicha Evans in a press release.

Image source: Amazon’s Zoox.

While Zoox has tested vehicles in Austin and Miami since mid-2024, it was using separate fleet vehicles, and now the company’s purpose-built robotaxi will slide into service for testing. The company’s dedicated in-house-produced robotaxi features sliding doors and seats that face each other, no controls such as steering wheel or pedals, and riders have the option to control the temperature and music.

Zoox is also pushing expansion within existing markets and noted it would more than double the locations it serves in Las Vegas, adding not only the convention center but a majority of the hotels along the Vegas Strip. The company also plans to add service to and from Harry Reid International Airport, which served roughly 55 million passengers last year and gives Zoox an opportunity to more quickly scale its ride volume.

Zoox’s expansion to new cities and markets is currently outpacing Tesla, which appears to have again overpromised and underdelivered for investors. While Tesla’s robotaxi pilot in Austin only launched last June, CEO Elon Musk had predicted that its robotaxi program would serve half the U.S. population by the end of 2025.

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NASDAQ: TSLA

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Why it matters

Tesla is pumping the brakes on that prediction and now expects to cover one-quarter to half of the U.S. population by the end of this year, pending regulatory approval. More specifically, Tesla plans to expand its driverless ride-hailing service to seven additional cities in the first half of 2026, including cities such as Dallas, Las Vegas, and Miami.

Worse yet, per Tesla’s own data early this year, its robotaxis were performing significantly worse than human drivers and had a crash rate much higher than key competitor Alphabet’s Waymo. A recent analyst note from Bank of America estimated that Tesla’s robotaxi accounts for a massive 52% of its overall valuation currently, with automotive checking in at only 21% and Optimus a paltry 2%. Falling behind in robotaxi development is not ideal for investors.

Tesla’s future and stock performance are clearly becoming much more driven by AI, driverless vehicles, and robotics, and overpromising and underdelivering on these projects will sting much more than it has in the past – Tesla needs to start catching up, and quickly.