When you purchase through links on our site, we may earn an affiliate commission. Here’s how it works. (Image credit: Sjoerd van der Wal/Getty Images) Sign up to Money Morning Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter Sign up Special invitations were sent to selected Tesla Model Y drivers early in the morning of 20 June, giving them permission to use their cars for the city’s geo-fenced robotaxi launch. That pushed Tesla shares higher in pre-market trading, even as S&P 500 futures fell on concerns over president Trump’s response to the escalating crisis in the Middle East. Tesla frequently ranks as one of the top stocks among retail investors and the robotaxi launch could be the first step in repaying this faith. “We view this autonomous chapter as one of the most important for Musk and Tesla in its history as a company,” said Ives. What will the Tesla robotaxi launch in Austin involve? For now the launch will be very limited. Musk has previously said that it will involve 10-20 vehicles, and that geofencing will confine the robotaxis to certain parts of Austin which are deemed to be most safe. That should just be the start, though. “This service should steadily ramp throughout the summer in Austin and it's our view Tesla will launch and scale its robotaxi service to roughly 25 cities in the US over the next year,” said Ives. “Rome was not built in a day...and neither will Tesla's autonomous and robotics strategic vision,” he added. The cars in Austin’s robotaxi launch this weekend will be connected to remote teleoperators that can intervene with the car in case of emergency. Despite these limitations, it marks a significant milestone for Tesla as it seeks to gain ground on Alphabet’s Waymo, which already has 1,500 self-driving taxis operating in four US cities, including Austin. Tesla's competitor Waymo already has thousands of self-driving taxis on the streets of four US cities including Austin, Texas and San Francisco, California (Image credit: Lindsey Nicholson/UCG/Universal Images Group via Getty Images) Why does the robotaxi launch matter for Tesla stock? Out of all the Magnificent Seven stocks, Tesla is by far the most expensive compared to its past performance. A price-to-earnings ratio of around 185 means that, if its profits never increased, it would take nearly two centuries for anyone who bought Tesla shares today to get their money back in equity. Tesla stock is so expensive because the business as it stands is essentially just a carmaker, but there is widespread belief among investors that in the future it will have a much larger revenue stream from its robotaxi business. “We estimate the AI and autonomous opportunity is worth at least $1 trillion alone for Tesla,” said Ives. The theory is that Tesla vehicles – perhaps, over time, every Tesla on the road – will be upgraded to become a robotaxi which can generate revenue for their owners by ferrying other travellers when they would otherwise be sitting idle. “If you could have somebody drive you around for a dollar a mile, that's a great deal and everybody will take that,” said Brett Winton, chief futurist at ARK Invest. Tesla would of course take a cut too – meaning that the company could generate ongoing revenue from hundreds of thousands of vehicles that it has already sold. “Once robo taxis are in the market, [Tesla] then becomes a point-to-point transportation provider rather than just a seller of hardware assets,” said Winton. This hypothetical future business model is largely what the market prices Tesla stock by. Investors have been taking it on faith from Musk for some time that the robotaxi launch is just around the corner. Now, the attention shifts from whether and when the robotaxi launch will happen, to how successful it turns out to be. Explore More