Elon Musk banks on his self-driving taxi service as Tesla burns through cash

Tesla's robo-taxis are needed more than ever.

The company lost $702 million in the first three months of the year and the EV maker doesn't expect to be profitable again until the second half of the year, according to first quarter earnings results reported Wednesday. Revenue was lower than expected at $4.5 billion.

CEO Elon Musk had braced for a losing quarter back in February when he announced the $35,000 base price for the Model 3, but he still sounded disappointed on Wednesday's investor call to discuss the sluggish numbers.

"The brand is losing steam," Jessica Caldwell, executive director of industry analysis at Edmunds, said in an email.

Still, Musk tried hard to pivot the call away from Tesla's losses and towards its robo-taxi masterplan.

He envisions his proposed Tesla ride-hailing service powered by self-driving cars, which he discussed in detail at an investor event Monday, as a future boon for the car maker. He claimed again on Wednesday that he could get 1 million robo-taxis on the road by mid-2020 -- pending regulatory approval, of course.

Tesla would take 25 percent to 30 percent of each fare, and the rest would go to Tesla owners putting their cars out onto the network for rent. It will operate similarly to Uber or Lyft's ride-hailing app, but without the drivers.

Currently Tesla vehicles have a semi-autonomous feature called Autopilot that can be added to the car, allowing it to auto-steer and change lanes, all while a driver remains at the wheel and attentive. But a new self-driving computer that will power the robo-taxis is 21 times better than Tesla's previous chip. It should be built into cars in at least three months.

Musk noted how a full self-driving capable Model 3 for $38,000 would be more than a car purchase, but a money-making venture. With a self-driving fleet, he said, "[Tesla] will have the most profitable taxi on the market." He said it was "financially insane to own anything other than a Tesla" with its autonomous features.

But it's tough out there for current willing Tesla buyers. Numerous customers are still waiting to get their ordered Model 3s. Tesla's first quarter ended with a rush to deliver its lower-priced all-electric sedan, a fact Musk lamented on the call. More than 10,000 cars were en route to customers before the quarter ended, and Model 3 deliveries were down 20 percent compared to the previous quarter with only about 50,000 of the cars delivered of the nearly 63,000 produced.

Also brought up on the earnings call was a forthcoming Tesla insurance for all those robo-cars without a human driver and a pending decision on a production location for the future Model Y compact SUV. (It's between Tesla's California or Nevada factory.)

Musk said an insurance product would be announced in about a month and would be "much more compelling compared to anything else out there." We've heard that one before.