3 questions Elon Musk will need to answer at Tesla's highly anticipated robotaxi event

• Investors' expectations are high heading into Tesla's big robotaxi reveal.

• They're looking for details about operations and safety.

• They also want to know how much this is all going to cost.

The stakes are high heading into Tesla's robotaxi day on October 10.

The event, originally scheduled for August, is where CEO Elon Musk has promised to release a final design and more detailed plans for Tesla's Uber-like self-driving-car service.

Investors are anxious to hear more about this arm of the business, which Musk has long lauded as Tesla's true value generator, as the electric-car company struggles in a more competitive EV market.

Musk first teased the robotaxi event in April after delivering disappointing first-quarter earnings that have kept Tesla's stock price muted amid wider market gains.

As is typical, Musk's promise that the robotaxi business was taking shape offset a major earnings miss and juiced Tesla's languishing stock price.

"I'll go back to something I said several years ago: that in the future, gasoline cars that are not autonomous will be like riding a horse and using a flip phone," Musk said on a call with analysts in April, adding, "We continue to make the necessary investments that will drive growth and profits for Tesla in the future."

Now he'll have to back up this promise with tangible results, an area in which his record is spotty.

Over the years he has bolstered investors' and customers' excitement by promising the imminent arrival of fully self-driving Teslas and other new vehicles and projects like the Boring Company's Hyperloop.

But there are still plenty of unknowns, some of which are pretty important to a prospective investor.

1. Who's in charge of all the cars?

In a recent note to clients, the UBS analyst Joseph Spak argued that Musk's plan to allow Tesla drivers to rent out their cars for self-driven rides might not be as simple as he's laid out.

"Is an individual really ready to let the Model Y they spent ~$45k on be used by strangers?" Spak wrote. "We believe human behavior may be difficult to overcome. Additionally, who is responsible for maintenance, cleaning and recharging? Where does the insurance responsibility lie?"

Musk has said that if owner rentals don't pan out, Tesla will operate a fleet of its own, but Spak described this plan as much more capital-intensive.

The latest attempt at Tesla fleet management didn't go well. The car-rental giant Hertz sold off its fleet of Teslas this year, citing high repair costs.

2. How safe is FSD?

In the same note, Spak raised questions about Tesla Full Self-Driving's rate of improvement compared with competitors like Waymo.

UBS estimates that Tesla's FSD v12.5 disengages every 180 to 200 miles, or every 100 to 120 miles on city roads. Tesla doesn't release its disengagement data, which Spak said would be important in gauging the readiness of a robotaxi service.

Spak pointed out that to meet the standards Waymo set for the California Department of Motor Vehicles' autonomous-vehicle program, with disengagement every 84,923 miles, Tesla would need a roughly 770x rate of improvement from the estimated city-street performance.

Safety is also at the top of the Morgan Stanley analyst Adam Jonas' concerns heading into robotaxi day.

"Will investors see data comparing the safety of Tesla's AV vehicle technology to human driving?" Jonas wrote in a note last week.

Trust in Tesla's FSD has been mired by a massive recall, and its predecessor, Autopilot, has been linked to several accidents over the years.

3. How much will all of this cost?

The elephant in the room on October 10 will be the size and cost of Tesla's future AI investments.

Jonas said there's already a capital "arms race" in the self-driving-car segment, adding that the resources "require heavy investment, potentially measured in the tens (possibly hundreds) of billions of $ of investment over time."

Spak said he expects Musk to talk about the total addressable market for his robotaxi business, which would help offset these costs, but added that those numbers should be taken with a grain of salt.

With all this in mind, Jonas isn't sure Musk can live up to investors' high expectations.

Aside from getting a demonstration of the latest version of FSD, and perhaps a ride in the Gen 1 Cybercab that has been spotted in Los Angeles, the Morgan Stanley analyst is eager to hear more about Tesla's plans for AI improvements and execution.

"Tesla's future valuation is highly dependent on its ability to develop, manufacture, and commercialize autonomous technologies," Jonas wrote.

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