Thinking about Tesla bridging to RoboTaxi via a Tesla-only ride-share network.
Makes a ton of sense.
Is potentially disastrous for Uber/Lyft.
But requires some savvy/tetchy execution including more complete vertical integration through the finance function.
(thread?)
Makes a ton of sense.
Is potentially disastrous for Uber/Lyft.
But requires some savvy/tetchy execution including more complete vertical integration through the finance function.
(thread?)
Why does Tesla doing ride-share make strategic sense?
The company has a data advantage today but could magnify it if their drivers drove more, and if those drivers were more autopilot/FSD dependent.
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The company has a data advantage today but could magnify it if their drivers drove more, and if those drivers were more autopilot/FSD dependent.
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A ride-share driver will do ~5x the miles of the average Tesla owner and will be much more likely to rely upon (and test) cutting edge driver assistance features.
Every Tesla that sits parked is an underutilized data-asset for the company. Ride-share will increase data-yield.
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Every Tesla that sits parked is an underutilized data-asset for the company. Ride-share will increase data-yield.
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The company already has a software-validation-advantage over its🤖🚕 competitors.
If you only have millions of miles how do you *know* that your potential robo-taxi stack is safer than human? (Answer: you don't.)
Ride-sharing amplifies Tesla's advantage in this domain.
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If you only have millions of miles how do you *know* that your potential robo-taxi stack is safer than human? (Answer: you don't.)
Ride-sharing amplifies Tesla's advantage in this domain.
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Even if Tesla had a robotaxi-capable vehicle in-field today they would be hard-pressed to convince regulators of its safety.
A working ride-share service that yields real-world intervention rates in the use-domain where they're proposing launch could prove unimpeachable.
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A working ride-share service that yields real-world intervention rates in the use-domain where they're proposing launch could prove unimpeachable.
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Moreover, if Tesla are going to execute on RoboTaxi the company needs to build routing, rider/driver matching, and payment processing capability anyway.
Would be better to efficiently iterate on the marketplace interface rather than trying to layer it on post-robotaxi launch.
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Would be better to efficiently iterate on the marketplace interface rather than trying to layer it on post-robotaxi launch.
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A ride-sharing service could become financially interesting to Tesla even prior to Robotaxi-launch.
Their drivers would have a massive opex advantage relative to uber/lyft.
And the rides would be safer, nicer, and serve as marketing for the underlying product.
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Their drivers would have a massive opex advantage relative to uber/lyft.
And the rides would be safer, nicer, and serve as marketing for the underlying product.
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(and don't forget Caroake!)
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Ride-share would also fulfill earlier the company's mission of moving the world to sustainable energy.
A ride-sharing Tesla takes that same drivetrain/battery and displaces ~5x the number of CO2 emissions than a Tesla mostly sitting in a garage.
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A ride-sharing Tesla takes that same drivetrain/battery and displaces ~5x the number of CO2 emissions than a Tesla mostly sitting in a garage.
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So it's a slam-dunk, right?
Tesla vertically-integrating through ride-share makes tactical and strategic sense, advances the company's mission, and would inspire untold numbers of backseat singalongs.
What could possibly go wrong?
(Well, about that...)
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Tesla vertically-integrating through ride-share makes tactical and strategic sense, advances the company's mission, and would inspire untold numbers of backseat singalongs.
What could possibly go wrong?
(Well, about that...)
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Bootstrapping a 2-sided marketplace is haaaard.
In order to attract riders you need drivers.
In order to attract drivers you need riders.
Chicken meet egg.
What is a credible strategy by which Tesla could do so?
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In order to attract riders you need drivers.
In order to attract drivers you need riders.
Chicken meet egg.
What is a credible strategy by which Tesla could do so?
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Tesla drivers should be able to offer superior service to their passengers at better take-home pay.
Even at a $50k vs $25k sticker price, a Model 3 ride-share driver has a lower 5 year total cost of ownership just on maintenance and fuel alone vs a Toyota Prius.
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Even at a $50k vs $25k sticker price, a Model 3 ride-share driver has a lower 5 year total cost of ownership just on maintenance and fuel alone vs a Toyota Prius.
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Add Tesla's ability to deliver insurance quantified against a driver's diligence;
autopilot and FSD improvements in fundamental safety;
reductions in passenger/driver liability from the in-car camera, and
Tesla could carve out a price advantage on insurance alone.
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autopilot and FSD improvements in fundamental safety;
reductions in passenger/driver liability from the in-car camera, and
Tesla could carve out a price advantage on insurance alone.
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Note that insurance eats an obscene percentage of Uber's COGs--roughly half.
Delivering passengers safely can make for a very good business.
And there is a *lot* of reason to believe that the marginal rider/driver combo in a Tesla would be safer than the same in an Uber.
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Delivering passengers safely can make for a very good business.
And there is a *lot* of reason to believe that the marginal rider/driver combo in a Tesla would be safer than the same in an Uber.
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From the driver's perspective if purchasing (rather than leasing) the vehicle and if Tesla does deliver on robotaxi capability, then
the ride-share driver ends up having financed the purchase of a modern-day taxi medallion via his/her own sweat equity.
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the ride-share driver ends up having financed the purchase of a modern-day taxi medallion via his/her own sweat equity.
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It's also likely that passengers would pay a premium for a Tesla ride-share.
Uber Select prices at a ~2x premium to UberX and even those vehicles are sometimes "Select" in-name-only)
Consistent with its brand Tesla could provide ride-share riders with a mass-luxury product
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Uber Select prices at a ~2x premium to UberX and even those vehicles are sometimes "Select" in-name-only)
Consistent with its brand Tesla could provide ride-share riders with a mass-luxury product
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Given the strategic rationale behind a Tesla-exclusive ride-share network, and that the company would still capture profit in the vehicle sale, Tesla could price the service at cost, or at corporate average gross margin (undercutting Uber/Lyft)
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(This is the disaster-scenario for Uber/Lyft: the service layer they're trying to abacadabra into profitability becomes a strategic customer-acquisition channel for an aggressive, technologically savvy mobility provider playing an orthogonal game.)
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So ride-sharing for Tesla makes strategic and tactical sense, they should have a cost and price advantage, what could possibly go wrong?!?
[Looks around the room expectantly, waiting for a flood of current Tesla owners to volunteer themselves as full-time taxi drivers...]
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[Looks around the room expectantly, waiting for a flood of current Tesla owners to volunteer themselves as full-time taxi drivers...]
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In order to bootstrap Tesla will need to figure out a way to geographically concentrate car supply into the hands of prospective ride-share drivers.
The current venn diagram between Tesla owners and prospective ride-share drivers is probably the infinity symbol.
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The current venn diagram between Tesla owners and prospective ride-share drivers is probably the infinity symbol.
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The company's best pathway be which to seed its ride-share market is likely to integrate through the financing function.
Automakers have a long history of financing their customers: Tesla can modernize that process.
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Automakers have a long history of financing their customers: Tesla can modernize that process.
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The end-product may be something like a lease+insurance with payments that automatically extract out of ride-share income at some discount to what you would pay if you elect not to drive ride-share miles.
(Available in certain geographies.)
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(Available in certain geographies.)
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The pitch to current Uber drivers:
same take-home pay but you're paying off a Tesla instead of a Prius
(and the driving is less stressful due to the integrated big-screen and FSD and some customer segmentation towards higher price-point riders).
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same take-home pay but you're paying off a Tesla instead of a Prius
(and the driving is less stressful due to the integrated big-screen and FSD and some customer segmentation towards higher price-point riders).
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Tesla also has the ability to concentrate supply as vehicles come off lease and are put back to the company; the Model 3 leases dictate that this occur.
This used supply could substantially improve the economics to any prospective drivers.
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This used supply could substantially improve the economics to any prospective drivers.
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As to how to catalyze the demand side of the marketplace, seems credible that Tesla could in part rely upon its rabid fans.
Many who cheer on Tesla don't yet own one, and many who do still rely on Uber or Lyft.
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Many who cheer on Tesla don't yet own one, and many who do still rely on Uber or Lyft.
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That Elon Musk can convince 20,000 to buy a not-a-Flamethrower from the Boring Company certainly implies that he could convince some subset of Uber/Lyft riders to download one additional app in hopes of spurring a more sustainable future.
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Is any of this practical or possible?
As I think about it: yes. Maybe inevitable even.
To penetrate Nevada (40k uber/lyft drivers) Tesla would probably need to get 10k vehicles/drivers in-market. SF would require 15k. LA would require 30k.
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As I think about it: yes. Maybe inevitable even.
To penetrate Nevada (40k uber/lyft drivers) Tesla would probably need to get 10k vehicles/drivers in-market. SF would require 15k. LA would require 30k.
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In any market that they seek to penetrate they would likely target half of current ride-share driver new car sales.
The entire initiative would, of course, be execution-intensive and require Tesla to take on new capabilities and core competencies.
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The entire initiative would, of course, be execution-intensive and require Tesla to take on new capabilities and core competencies.
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But the potential reward--even without a robotaxi future--could be compelling.
The economics of a Model 3 sale would move from a one-time $5k operating earnings-type event, to a fleet asset expected to generate $15k *annually* in operating earnings.
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The economics of a Model 3 sale would move from a one-time $5k operating earnings-type event, to a fleet asset expected to generate $15k *annually* in operating earnings.
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In effect Tesla could potential generate RoboTaxi-type economics as a tactical and strategic bridge to get to the actual operational RoboTaxi capability.
Service layer economics could begin to feed into the financial model sooner.
The future may come faster than we think.
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Service layer economics could begin to feed into the financial model sooner.
The future may come faster than we think.
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@threadreaderapp unroll
