Wedbush Securities, in a note to clients cited by TheFly, stated that Tesla’s robotaxi ambitions pose a long-term threat to Uber’s business model.

Uber Technologies (UBER) shares fell on Thursday as investors weighed the prospect of fresh competition from Tesla’s (TSLA) expanding push into driverless vehicles.

Wedbush Securities, in a note to clients cited by TheFly, stated that Tesla’s robotaxi ambitions pose a long-term threat to Uber’s business model. 

Tesla is preparing to launch its long-anticipated robotaxi service in Austin on June 12, according to a Bloomberg report. The milestone marks a critical step in Elon Musk’s strategy to center the company around autonomous technology and artificial intelligence.

The internal launch date could still shift, but the company has already conducted public road testing in Austin, reportedly operating a Model Y SUV with no one in the driver’s seat. A Tesla engineer rode in the passenger seat during the test with no remote operator involved.

Wedbush, which holds a ‘Neutral’ rating and $85 price target on Uber, noted that while the Tesla development may take time to scale, the emergence of a credible driverless ride-hailing competitor adds pressure to Uber’s long-term outlook.

Tesla’s robotaxi network, which will operate without human drivers, poses a direct threat to Uber’s core business model. Uber relies on a vast pool of human drivers connected to riders through its app, a system that a fully autonomous alternative could disrupt.

Uber CEO Dara Khosrowshahi has previously expressed interest in partnering with Tesla, stating that he would prefer collaboration over competition. However, Elon Musk has suggested Tesla plans to operate its own ride-hailing network rather than supply vehicles to third parties.

If Tesla’s robotaxi effort gains traction, analysts say Uber could lose ride volume and face downward pressure on the commission fees it charges drivers.

Uber’s stock fell over 4% in midday trade on Thursday. The shares have gained more than 36% this year and 34% over the past 12 months. 

Tesla’s stock was up 1.5% on Thursday. The shares declined over 7% this year but gained more than 108% over the past 12 months. 

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