Considering how much the medium term valuation of this company is becoming dependent on robotaxis, has anyone modeled what the potential losses / profits are dependent on accident rate? This is the main issue right? Critical disengagement rate matters ultimately because of the cost / mile driven it may affect. We should get more insight into this.
I just created a small spreadsheet, simple analysis. Gonna assume certain miles driven, but everything calculation is scaled with miles, not assuming fixed costs.
Let's say a robotaxi drives 60,000 miles per year. 75% of those miles are revenue generating. Revenue at $0.5 per mile. Operating costs of $0.2 per mile.
Accident rate: Let's assume 10,000 miles per "accident" to start.
Accident costs: These is the big variable that people can argue / give input on what is the best assumption. I googled and costs are all over the place. Let's assume $5000 payout cost Tesla would owe per accident.
Based on these inputs, total revenues would be $22,500 per year, and costs would be $42,000. A loss of $20,000 per year. Most of that due to accidents. If Tesla started with 10,000 robotaxi vehicles, they would lose 200 million in a year. 2 billion for 100k. And so on.
Let's now assume accident rate is 100,000 miles per accident. Now operating cash flow turns positive to $7500. So for 100k robotaxis they would earn a bit under 1 billion dollars per year, and so on.
Under this presumed $5,000 cost, at what accident rate would Tesla be breakeven?
I get about 30,000 miles per accident.
If cost per accident is $2000, then breakeven is ~ 12,000 miles per accident.
If cost per accident is $10,000, then breakeven is about 60,000 miles per accident.
Accident rates for human drivers are less frequent then this, so Tesla should be profitable at a lower level of reliability.
So I don't think the problem will be operating costs in ramping up a robotaxi network, it will be human injury rates that people may object to.
If Tesla can prioritize reducing high speed accidents more than fender benders, this could be the biggest benefit.
So Tesla could probably start some robotaxis in urban areas (no highways) when accident rates are around 30,000 miles per accident. With a small fleet, total number of accidents may not be too high or harmful. The costs should be okay.
If we assume a critical disengagement = accident, then the current rate is ~ 300 per mile. So Tesla needs to 100x the miles per disengagement to have a viable product to start a robotaxi network.
TLDR your investment mostly now depends are one metric: miles per critical disengagement. Expect a big improvement this year. But pay attention to if / when the rate of improvement starts slowing down again (as in any model, it will). If it starts slowing down not close to 30,000 / disengagement, that could be problematic.
