San Francisco, California

Investors and analysts are left flummoxed after Tesla unveiled a sporty, two-seater robotaxi called the Cybercab. At a highly anticipated event near Los Angeles on Thursday, CEO Elon Musk unveiled plans to begin producing the vehicle by 2026 at a target price of under USD 30,000. The low-slung design, though, breaks markedly from what we've come to expect from a taxi: it accommodates few or no passengers or luggage at all. 

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But Musk did not say how this two seater would meet the demands of families, groups that will be visiting restaurants or airports, potentially questioning the market viability of this product. The next day, Tesla's stock dropped 9 per cent on Wall Street. Jonathan Elfalan, vehicle testing director at Edmunds.com, pointed out that when you think about a cab, 'you think of a vehicle that holds over two people.' "Why a two-seat only approach, this is perplexing."

Industry experts suggest that the robotaxi should look like the traditional taxis with ample space and accessibility. Musk did show off a futuristic robovan that could carry 20 passengers at a time, but there was no time frame for the release of that specific product.

A two-door design seems to be designed for a niche market, as according to J.D Power. Though Musk predicted 20 cents per mile cost for the robotaxi, he knew little about production timelines or regulatory hurdles. John Krafcik, Uber's former CEO and ex-Waymo boss, called the Tuonela design 'a little more playful than serious,' noting that older passengers and people with disabilities might find it challenging.

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Companies like Waymo are on the scene already operating a fleet of four passenger robotaxis in several US cities. Tesla’s future will depend on its ability to capture market share in the nascent, regulated robotaxi sector. Previously, Musk threw in the towel and scrapped plans of a smaller, cheaper vehicle to instead focus on company’s autonomy initiatives. Were the two-seater configuration of the Cybercab to be successful then Tesla could have a valuation of USD 5 trillion compared to the current USD 700 billion.

Yet industry experts say that the idea of a two seat commuter vehicle has been proposed for a long time, and has never quite caught on. Ultimately, a larger robotaxi design may be necessary for Tesla to grow its market appeal.