Reposting my own post:-
After giving Robotaxis some thought, the closest historical parallel is the building of railways.
Prior to railways walking was probably the main means of travel for the majority of the population, only a minority owned a horse or could afford to travel via horse and cart.
Railways did 2 things:-
- Reduced travel times
- Made travel affordable for a substantial chunk of the population.
The help shape cities and commuting habits, and tater on the car added suburbs into the mix,
So each new travel option changes a lot of things.
Looking at the TAM for Robotaxis, the first question is:-
- Do we really need someone to drive people around?
I think the short answer is no, and that has implications for:-
- Ride share
- Taxis
- Bus Drivers
- The size of buses
If FSD works, smaller mini-buses are a more efficient option than larger buses.
And the next question is:-
- If the cost of a Robotaxi was roughly equal to the cost of public transport, which option would you choose?
And the final question is:-
- if you currently drive you car to work each day, what do you pay for parking?
So my base case is:-
- 100% of rideshare
- 100% of Taxis
- 100% of buses
- 30% of public transport (subway, train)
- 30% of commuter miles
The bull case assumes that Boring co tunnels work:-
- 100% of rideshare
- 100% of Taxis
- 100% of buses
- 40% of public transport (subway, train)
- 50% of commuter miles
- 100% of people and places that currently have no affordable transport option.
I don't think this applies only to cities I live in a costal holiday area and lots of tourists fly into the area or the airport at the nearest big city. Many locals drive to train stations and commute to the city for work. A Robotaxi here would get a surprising amount of business.
I also see many young women here driving large pickups, I think the vast majority of these cases are single car families, and while the wife is driving the car the husband isn't working. Before you feel too sorry for the husband, he is probably surfing.
My daughter doesn't have a drivers licence, and I'm not encouraging her to get one, it will be a waste of time and money. I've told her she probably doesn't need one, even that didn't motivate her to get one.
Why do I think FSD/Robotaxi will probably work?
Because Elon thinks it will, and he is backing his conviction with a total overhaul of the company structure, and large investments in AI compute.
There are only 3 alternatives:-
- Elon is right.
- Elon is eventually right, but it takes longer than expected.
- Elon is wrong, and it never works.
The bet Elon is taking is that it works in the timeframe he expects, or it takes a bit longer, That is not a "bet the company" bet or an all in option. There are short term implications on other programs in the current macro and interest rate environment.
Limiting Factor coined the term:- STED (Smarter Than Elon Disease) it is spreading faster than peak Covid.