Speaking at Tesla’s recent Autonomy Day, a showcase of the company’s self-driving technology, Chief Executive Elon Musk seemed to frame the company as a taxi tech enterprise.
Musk has been thinking out loud since 2016 about the Tesla Network of autonomous electric vehicles available for service through a ride-hailing app. It’s in the Master Plan now.
And, Musk seems confident that it will be real next year.
“I feel very confident predicting that there will be autonomous robotaxis from Tesla next year – not in all jurisdictions because we won’t have regulatory approval everywhere,” Musk said.
Tesla Network works like this:
- Tesla owners can add properly equipped vehicles to be hailed on the Tesla Network
- Riders can summon a car through an app, similar to Uber and Lyft
- Tesla takes “25 percent to 30 percent” of the revenue from those rides
- Tesla will operate an owned fleet in areas without enough customer-owned cars
Tesla says owners who add cars to the Tesla Network could make as much as $30,000 per year in profit from them.
“The fundamental message consumers should be taking today is that it’s financially insane to buy anything other than a Tesla,” Musk said. “It’ll be like owning a horse in three years. I mean, fine if you want to own a horse, but you should go into it with that expectation.”
Musk forecasts an 18 cent/mile incremental cost of operating a Tesla in the network. Tesla figures that a price of $1 per mile – half the price of Uber and traditional taxis – allows enough profit to make Tesla owners happy after Tesla takes a 25-30 percent cut.
There are, of course, a number of additional logistics to be considered for Tesla Network to be operational. For instance, the robot cars must drive themselves, but also recharge themselves when the battery is depleted.
Musk said he expects the robotaxis to return home to park for a recharge. When asked about the “snake charger” Tesla unveiled in 2015 that would slither into the charge port on its own, Musk chuckled and alluded to similar solution in the works.
Another difficult hurdle for robotaxis will be regulatory approval. Musk acknowledged as much, but didn’t elaborate on the approvals expected. There are no federal laws regulating autonomous vehicles, but local and state laws that regulate ride-hailing networks could prove to be a thorn. While Musk believes regulation will initially slow the rollout of robotaxis, he also believes that society will begin to demand robot drivers.
“People may outlaw driving cars because it’s too dangerous,” he said. “You can’t have a person driving a 2-ton death machine.”
Musk explained that to prepare for this robotaxi future, Tesla vehicles are engineered to last a million miles, with current battery packs capable of 300,000 to 500,000 miles. They’re also thinking of how the car design will evolve.
“Two years from now we’ll make a car with no steering wheel or pedals,” Musk said. “And if we need to accelerate that time, we can always just delete parts, easy.”
That seems like an overly ambitious statement from Musk, which he admits happens from time to time. Before any of this can happen, Tesla has to produce a system capable of fully-autonomous driving.
“Only criticism, and it’s a fair one, [is that] sometimes I’m not on time,” Musk said. “But I get it done, and the Tesla team gets it done.”
Though, he hasn’t exactly hit the mark on self-driving predictions in the past. In October 2016 he said that every future Tesla vehicle would be capable of driving itself. Further, he promised Tesla would complete a fully-autonomous, coast-to-coast drive in 2017, which didn’t happen. And now all cars made since fall 2016 will need to be retrofitted with a “full self-driving” chip.
A deep dive into the development and capabilities of the chipset were offered at Autonomy Day. The Samsung-built chip is 260 square millimeters in size and contains 6 billion transistors. Tesla claims the chip has 21-times the performance of the previous Tesla hardware powered by Nvidia and is designed specifically for self-driving cars, capable of Level 5 full autonomy by 2020.
“By the middle of next year, we’ll have over a million Tesla cars on the road with full self-driving hardware, feature complete, at a reliability level that we would consider that no one needs to pay attention,” Musk said.
The plan is not without naysayers.
Cowen’s analyst Jeffrey Osborne said in a note that Tesla’s robotaxi plans seem “half baked” and that the company appears “to either not have answers to or not even considered pretty basic question on the pricing, insurance liability, or regulatory and legal requirements.”
Morgan Stanley’s Adam Jonas took issue with Musk’s timeline, saying it will take years, possibly decades, before a human driver is absent from a car.
But, don’t tell Musk. He seems intent on piloting a robotaxi company next year.
“From our standpoint, if you fast forward a year, maybe a year and three months, but next year for sure, we’ll have over a million robotaxis on the road,” Musk said. “The fleet wakes up with an over the air update…”
“That’s all it takes.”