Motley Fool Hidden Gems Investing - Tesla’s Key Robotaxi Rollout

Episode Date: June 23, 2025

FICO turns to BNPL data and Fiserv embraces a new stablecoin. Andy Cross, Jason Hall, and Matt Frankel discuss: - FICO to include BNPL data - The importance of Tesla’s robotaxi - Tesla’s advantages and challenges in self-driving - Fiserv launches its own stablecoin Companies discussed: FICO, TSLA, GOOGL, UBER, FI, PYPL, CRCL, SHOP Host: Andy Cross Guests: Jason Hall, Matt Frankel Engineer: Dan Boyd Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, "TMF") do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Motley Fool Money, I'm Andy Cross, joined by Motley Fool contributors Matt Frankel and Jason Hall. Today, we're discussing Tesla's robo-taxi rollout and yet another stable coin that's on the horizon. But first, let's get to our headlines for Monday, June 23rd. On Saturday, the U.S. launched strikes on Iranian nuclear facilities, triggering investor concerns about raising oil prices and the potential for geopolitical escalation. Yet in that nothing ever happens market to coin the popular investing meme, investors look past the news to bid stocks higher. The S&P, NASDAQ, and Dow Jones are all up today. Moving to company news, Tesla rolled out its long-awaited robo taxis in Austin, Texas on Sunday. The initial rollout is limited and

featuring a small fleet of 10 to 20 Model Ys operating within a geo-fenced area. The event was accessible on an invite-only basis to well-connected social influencers, and a Tesla safety monitor was present in each vehicle for rides that cost a flat $4.20. More on Tesla in a bit. Eli Lilly reported that its experimental anti-obesity bill or full grip run helped diabetics lower weight and lower their blood sugar in a phase three trial with results that were comparable to injectable GLP drugs like Xempic and Munjaro. Side effects were also similar. So the company is aiming to file for regulatory approval as a weight management pill later this year and a treatment for diabetes in 2026. The Wall Street Journal is reporting that Fair

Isaac, the company behind FICO scoring system, will for the first time introduce a new model that includes buy now, pay later loan data as a factor. It has been testing this model in a partnership with a firm on 500,000 buy now, pay later users. It actually found that its users with more than five buy now, pay later loans saw scores increase or stay stable in the early testing. We'll talk a little bit more about FICO in a second. And finally, on a sad note, Fred Smith, the founder of FedEx, died this weekend. Mr. Smith was one of the great entrepreneurs and business leaders of the past 50 years. He started FedEx in the early 1970s, creating the overnight package delivery industry that is so ubiquitous today and so many of us rely on for our purchasing

habits. Fools, we'll get to that Tesla news in a few minutes, but let's start with this reported FICO news, because I think that's important. Matt, how important is the FICO news, and how important is it that BNPL loan data is factored into its algorithm? Well, I mean, it is important. A lot of consumers don't realize that they don't even have a FICO score. One of the requirements is you have to have an active loan account within the last six months. And if all you have are buy now pay later loans, you might not have that. On the other side, it's in testing phase right now. It's going to roll out later in the fall in a new version of the FICO Score 10 model. But it's really worth pointing out that the FICO Score 10 isn't even widely in use yet.

In fact, the FICO Score 9 isn't even very widely in use beyond some parts of the personal loan industry. It's really the FICO Score 8 version that's still the most widely used by lenders in practice. So it's really going to take some time before this actually helps anyone get a lower interest rate on a mortgage or helps anyone get a better credit card. I think why I find it kind of encouraging is at least they continue to innovate and they're adding new and new spots because Jason, they have, I mean, there's lots of competitive threats out there to the FICO scoring system. And I think this allows them, even though they're continuing to use maybe an older model and we'll see how long this takes, it at least keeps them on the cutting edge.

Yeah, it's interesting because I just got an email literally in the past 24 hours from Capital One, excited to tell me that they were moving over to FICO 8. I think it's very much whoever the financial services business you have the relationship with, it's dependent on, right? Because it's interesting as Capital One is kind of one of the tech forward, they live on the internet sort of businesses and here we are. But I think that it's a reminder, this is just a gigantic market, and we're going to see FICO need to continue to innovate and offer different things as consumers' spending habits and the way people buy changes and the way those things get categorized by the financial system. It's a reminder that there's a lot of opportunity out there, too.

Well, I mean, in the BNPL space, it means a $100 billion, or if not now, will soon be a $100 billion loan market, and it's really popular with some of the younger consumers. So, Matt, I think it does represent some positive news for FICO, which actually earlier this year, the stock's down 8% or 10% this year to date because of just some of the inclinations and some of the talk from the Federal Housing Finance Agency about, hey, we pay a lot of money for this FICO data. Do we need it at all? FICO does need something to get people to adopt the newer versions of their scoring system. So, this could be kind of a kickstart. For example, there really wasn't that much difference between FICO score 10 and FICO score 9. It gets people to upgrade

what they're paying FICO for. At the same time, the federal housing finance, they make a great point in that, why do we need a separate score from three different credit bureaus? Why are there 10 active versions of the FICO score still in existence? Can't we have some consolidation? This needs to simplify. Yes, they have new products, but the direction is definitely toward lower fees and financial services. So, FICO really needs to differentiate its product, and this could be a positive step for that. Well, it's a $44 billion business, a stock that has crushed the market over the past one, three, five, and 10 years, but it's down, like I said before, 10% this year. So, what do you all think? Does FICO jump to the top of your list as a buying

opportunity today? For me, it's not a stock that I own. I've never owned the stock. I do think the direction of fees is going to gravitate downward over time. Their product is very valuable. It's something that businesses rely on. But I do think that the FHFA is not the last one that's going to have an issue with paying too much for credit scoring. Jason? Yeah, I agree with that. And then there's just valuation, too. There's a time to pay a premium for a business, and that's when it's young and it has the ability to grow and take market share. This is the giant. This is the gorilla in this space. And just on a sales metric, I know that sometimes that's empty calories, but I think directionally it's useful here. As much as the stock is down, it still

trades for 25 times sales. Its 10-year average is closer to 11. So that says to me, especially considering the potential for some, over the long term, a little bit of a squeeze compression on margins, then I'm a little less interested today. Now, they did raise prices six months ago. So in the near term, I think margins are going to go up and the market's betting on that. But I think over the longer term, it's more likely we see the other trend. Well, still in a very healthy quarter. But like you said, Jason, I think the reason we haven't featured it really as a top buy very frequently is because that valuation, top buying stock advisor is because that valuation. So I'm continuing to watch it. I think it's a high quality business, but they do have these threats.

So I think I'm not really rushing in to buy it right now. When we come back, more on Tesla's robo-taxi rollout. You're listening to Motley Fool Money. In Toronto, every arrival is a statement, and nothing says it better than this. Cadillac Optic was the number one selling luxury EV in Canada for 2025. Find your rhythm across a seamless 33-inch display and an immersive 19-speaker AKG surround audio system. This city demands agility, and Optic delivers with precision to make every drive extraordinary. Let's take the Cadillac.

Find out more at CadillacCanada.ca. Luxury sales claim based on S&P Global Mobility Canadian new vehicle total registrations for calendar year 2025 for the Cadillac definition of luxury. As we mentioned at the top of the show, Tesla launched its robo taxis this weekend in Austin. Jason, how much is this launch a needle mover for this $1 trillion company? I think it depends on how you define it. If you're just focused on just this one thing, this is small, right? As by design, it's small.

But if you step back and you look at a 35,000-foot view, this is a huge step towards monetization of autonomous transportation. We have to remember, that's one of the pillars of Tesla's future. It's supposed to be one of the cash cow businesses that it needs to pay for all of the other things we continue to see advancements in, fields like robotics, politics, energy. I remember Elon Musk has told us repeatedly that Tesla's future is an integrated energy and transportation business. Yeah, I think this is one part of that puzzle. I think it is a very important step, though, because when you look at the valuation for Tesla, a good chunk of it is obviously, as you mentioned, Jason, it is not just in their current car

business, Matt. So, I think the future does depend on these kinds of innovations. So, I was very happy after a few kind of delays, and Tesla's had a little bit of a struggle the past six months. I think it is a good sign that they got this out, and even though it was very well-controlled, geo-fenced in, monitored in the cars, monitored by a Tesla safety official, I think it is good news to at least get this started inside Austin, because the competitive pressures are out there. The competitive pressures are out there.

I don't really mind the delay. When you look at what happened with Cruise, that's a really good cautionary tale. It's not just that a setback would be like, okay, back to the drawing board and we start this again. Cruise ran over one person and it was a death sentence for the business. I don't mind the delays to get it right. I don't mind a smaller-scale rollout than some competitors are doing to get it right. I do think this is definitely a step in the positive direction.

There were a couple of minor issues reported, like breaking too hard for the situation, but nothing that's a big safety issue. So, it's a success, and the stock's up, and rightfully so. Yeah, it is up nicely a little bit today. Let's handicap the field. What does this mean for Waymo, which is the driverless unit from Alphabet or from Google, and Amazon Zoox, which is, I think, a little smaller and lesser known? Where is Uber these days?

How do you all see, Jason, how do you see the field of competitors when it comes to autonomous driving and robo-taxis? It's a massive market, so there's going to be lots of competitors. I expect potentially multiple winners in this area, potentially. We don't know how it's going to be regulated. Just in the U.S., there's 51-plus regimes, every state, the federal government. And then you're going to have local regulation as well that's going to play a role here. So we need to see how that's going to play out. I think looking across the space, if I were to handicap at Waymo is the distant leader right now. It's not even close in terms of miles driven,

dedicated vehicles doing it. You have to remember Tesla, this is not the cyber cap. This is not their, their, this is their, this is their, just the model of the model. Um, why I believe that they're doing right. So they still don't even have the full commercial vehicle yet. Zooks is a commercial vehicle. That's purpose-built Waymo is purpose-built. So it's, it's Tesla has a long way to go here. But part of what Tesla is banking on is all of the billions of miles that Tesla's writ large have driven in the wild, so to speak. That's a big part of their strategy and the data that they've used to train their autonomous driving. So they're going about it in a different way. So I think putting it in the geofenced area where you can really get good measurable data

is going to be really, really important. And then they can maybe translate that over to other vehicles. The wildcard here is Uber, Andy. And I think Uber is still positioned to be a huge winner in autonomous driving. We have to remember, you go back five or six years ago, Uber had an autonomous driving R&D business. They sold off because there was this realization that the math was not favorable. So, the decision was made, hey, let's just build the best rideshare platform, be a really good partner for drivers. And eventually, drivers are going to be companies with the autonomous technology, they'll become partners with us, too, because they're going to come to us the same way that banks go to Visa. We have the platform and the customers. They've

done an extraordinary job with that. I think being able to share in autonomous driving when it's road-ready and profitable was a smart move for Uber. Matt, do you have a key question on Tesla when you look forward, whether it's driverless technology or other things that you're paying attention to? Really, it's how much of a competitive advantage they have over companies like Waymo, it's really tough to overcome a first-mover advantage. Tesla has the edge that they manufacture their own cars, that's a big one. The infrastructure they have set up already is something that would be really tough to replicate, even for an Amazon or Alphabet. It's just how much of a competitive advantage is that when it comes

to this race? Elon Musk has said that this is the future of the company, and the stock reflects that. So how much success will they actually have with robo taxis? Yeah. And why Waymo has, you know, they're doing 250,000 miles, I think, or trips per week. And they have a fleet of cars across multiple cities. Making those cars at scale are far more complicated than I think making the Tesla. So that's an advantage for Tesla when it comes to scale. Jason, when you think about Tesla going forward, what are some key questions you want answered? I think the biggest thing is, how are you going to pay for everything? The one true success Tesla has had so far was coming to market with a very fast, high-performance car you could sell for a

ton of money and commoditizing the batteries. Instead of trying to build these aerospace-grade batteries, commoditizing the batteries to drive cost out. That's Tesla's biggest innovation. Their second biggest innovation has been using tax incentives to raise substantial funds for energy credits. So those are the two things that Tesla's done well. So far, it hasn't really been successful in energy. It hasn't been successful in solar with the solar roofs. So we need to see something start getting to the point where there's obvious commercial opportunity to generate revenue because the auto business is in a really tough space right now. Yeah, well, I think they continue to kind of think about that ecosystem, especially with Jason, as you mentioned, all the cars that are out there.

Hopefully, at some point, again, this is part of the valuation is tied into the system to be able to have fully autonomous driving across their entire car fleet that's out there in operations. Nope. Nobody else would be in the position if, if they start showing success to literally flip the switch and begin monetizing something without pouring billions into capital and taking months to years to build out the infrastructure to do it. How about a prediction guys? So when you look out where, at what point, what year will fully autonomous vehicles start to eclipse the number of human driven cars out there jason 2045 and i'm being in and i'm think i'm probably being overly ambitious matt i'd say around then just because every setback would cost years it could you know and like i'm hitting somebody with a car would you know add years

to the timetable yeah yeah i think i i'm in that 25 to 30 year period probably at that time but i am excited i have not yet ridden ridden in a driverless autonomous taxi like a waymo um but i I certainly would. I think I would. I would probably put my kids in there if I was out in San Francisco and had an opportunity to do it, or one of the other cities. Are you guys doing that? Yeah, I would agree with that. I think the safety measures are there. They're so focused on safety right now. I do believe that those environments are probably safer than being in any other vehicle on the road right now. Yeah, I've only done one in a very controlled situation in the Hyperloop, or not the Hyperloop, the boring company's tunnel in Vegas, but with a

safety driver sitting in the seat in the car. But yeah, I would try it. After the break, fintech juggernaut Fiserv turns towards stablecoins. When you're a mid-sized business, you need every competitive advantage you can get, like an AI solution that works for you, not against you. SAP Grow is built with AI embedded at its core, working across every system, and it's ready to go from day one, so you can hit the ground running. Bring it with SAP Grow, AI cloud ERP for any size business. Fiserv, the $90 billion in market cap financial giant that runs the infrastructure behind today's financial networks, is launching its own stable coin in a new digital asset platform. Now, Matt, why should investors and consumers care about

this news from Fiserv today? Well, a lot of people joke that stable coins are solving problems that don't exist. But I don't really see it that way. If that were the case, it wouldn't cost so much money to send an international transfer, for example. No one's really figured out how to do that effectively with U.S. dollars. That's really one of the situations where stablecoins come in. Instant transfers are another thing that have proven more difficult than you would think without using some sort of stablecoin. As far as investors, it really just helps Fiserv preserve what it does rather than create a new revenue stream. It helps keep it fee-competitive long-term. In all the financial service industry, the direction of fees has been

downward for 10 years and continues to be that way. I see it more of a defensive maneuver by both Fiserv and PayPal, but a necessary one. Yeah, PayPal is their own stablecoin, Jason. I mean, stablecoins are just really starting. We saw Circle go public, and that's the home of the U.S. stablecoin, the USD stablecoin. So we're just seeing more and more conversation go out this. And we saw the Amazon Walmart also starting to explore stablecoins because of those benefits for it. And I think, do you see this as just maybe the beginning of us starting to move down the whole stablecoin direction? It's the beginning of something. There's no doubt about that. I think the biggest news in all this was Shopify last week partnering with Coinbase and Stripe to bring USDC, which is Circle's coin that Coinbase has a big stake in, to Shopify merchants.

That's really big to me, because that's when you actually start to see monetization happen in a very big scale. So the question I have is that what we're hearing a lot of, like with Fiserv and others, is creating their own stablecoin. Uh, this harkens back to the, you know, the 1800s when banks had their own bank notes, there wasn't a U S dollar, it was bank notes, right? So we're going through a weird phase like that where, when I think it's really going to get interesting to me is when we start seeing those things consolidate down and go away and where we end up with just one or two. And I don't know how long that's going to take and what's the value. And I think at the end of the day, we're going to see the payment processors and the Visa and MasterCards. They're going to

compete in this too. They're not going to give up just seed share. And also the thing that I want to see the biggest question I have around stable coin broadly in financial services, everything that we're hearing is debit. It's talking about replacing debit. It's not talking about replacing credit and credit rewards programs. All of those, those are the things that really drive the fees structures out there for credit is those programs that we all love. So until somebody shows a crypto solution to that, then, then I think we're going to end up right back where we started. Maybe it's in 20 years but that's the thing behind the fees that nobody wants to talk about yeah and there's i mean there are exactly um jason there's so many advantages that consumers like with the

with the credit transaction there are those advantages with these stable coins scale and distribution real-time settlement is a big one that's growing cost so we start to see i think we will those benefits are going to be coming over the next few years so i think we will see continued utilization launching utilization of these matt i do wonder when mainstream they become more mainstream some similar to our question about tesla that's my question to you all when do you think these stable coins will start to become a little bit more stream more mainstreaming consumers will start to see them show up more the more seamless they become to use that's when you start seeing mass adoption of any technology when it becomes really easy

for people to use right now if you told me how paypal stable coins been in existence for 2023 I follow the company closely. If you ask me how to use it, I don't know. No matter how revolutionary a technology is, if it's not easy, people aren't going to adopt it on a mass scale. That's really going to be the iPhone moment with this, is when you see it really become easy and seamless for people to use, like swiping a button on a phone. Jason, are you going to be using stable coins sometime in the next year or two? I mean, in the right circumstance, I would. I have a significant interest in crypto, so I'm definitely not somebody that's anti-crypto here. But I would say my guess is that it's going to either happen within the next five years or it's not going to

happen. One of those two. Does this make either of you more excited to look at Fiserv as a potential investing opportunity? I would say maybe. I'm a PayPal investor already, so I'm kind of... I mean, they just announced a partnership where their two stable coins are going to kind to intercommunicate. I have a pretty big position in PayPal, and for that reason alone is why I probably wouldn't add Fiserv. But if I didn't already, it would be one that's worth a much closer look. To a certain extent, it just feels like a defensive move. We're seeing a lot of these legacy tech companies in finance do these sorts of things because they need to, to either move forward or to retrench. It doesn't make me any more interested in Fiserv than I would have

been a week ago. Yeah. Same with me. I'm with Matt. I'm a PayPal shareholder. And I think that's the one that I think I'm most excited about across the fintech space right now. The Shopify news was great, Jason. I agree with that. I think that's a really more competitive position for Shopify and their payments are so important to their business. I saw that as a natural segue for them to go. It's going to become, Andy, it's going to become table stakes though. You're going to see the same thing across the industry, and it's not going to drive value, but it's a reminder of the mindset for Shopify's management that they're constantly going to be arming their merchants with these sorts of tools, and they're going to be ahead of the competition. But it becomes table stakes

there. If you talk about upside, I agree. PayPal is probably more set to profit, and shareholders get rewarded from this sort of thing. Well, Jason, Matt, thanks for joining me here on Motley Fool Money to talk about Tesla, stable coins, and a little bit of FICO. Here at The Motley Fool, we love hearing your feedback. To be part of that feedback or to ask a question, email us at podcastsatfool.com. That's podcastsatfool.com. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements

are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. For Jason Hall, Matt Frankel, and the entire Motley Fool money team, I'm Andy Cross. We'll see you tomorrow.