There are probably factors I'm missing as an outsider, but when the FSD software is safer than a human and enables robotaxis, $1B immediately is much more useful than $2B over 5 or 10 years. To understand why, one needs to appreciate the economics of a robotaxi:
- Let's assume $30-35k up front costs (should be lower long term, but base M3/Y and base Cybertruck cost about this much to manufacture).
- Say a cost to operate of $0.20 per mile (Elon quoted $0.18 in his presentation, could be much less long term).
- Assume $0.70 price per mile compared to the $2-3 that other ride hailing services charge.
- At 50% useful miles, that'd be $0.35 revenue per mile.
- This means $0.15 profit per mile.
- Assume a robotaxi operates 100 hours per week (should be 24/7 minus charging and maintenance time initially when there's limited supply, but could still be far more than 100 hours long term, if taxis transport cargo during off-peak hours).
- If the robotaxi travels at ~25 mph (similar to Uber), that'd be 2,500 miles per week.
- That means a robotaxi would earn $375 per week, and ~$20,000 per year.
These numbers are on the conservative side. Even $1 per mile would significantly undercut competition.
Nonetheless, the initial $30-35k investment pays for itself within 2 years, and then could generate as much as a 50% or more ROI per year.
This is why from my perspective I think it makes sense for Tesla to prioritize up-front cash, so that it can buy as many of its own vehicles as possible once FSD is safer than a human. However, there could be other variables that favor the subscription model, that as an outsider i am simply not aware of.
Operating one's own fleet of robotaxis is the mother of all recurring revenue
Once FSD is safer than a human, FSD attach rate should be 100%*, and it'll make sense for Tesla to get this cash up front to invest in its own fleet of robotaxis.
*People or investors will line up to buy a $40k EV + $20k or $30k FSD option. $60k or $70k for a robotaxi that can make you $200k or more over a 10 year period is a pretty damn good investment.