Tesla's real plan is to disrupt itself with the robot cars.

[EVNow]

Makes a huge difference in vehicle dynamics whether you have two wheels upfront or like the Mahindra in the back...

I agree - I was just pointing out the original post I replied to also showed one wheel in the front and 2 at the back.

 

[EVNow]

Does Tesla intend to start pricing cars at equilibrium (say, $100K), or "give" them away at roughly current prices? Which of these best meets Elon's goals, but also the goals of his investors?

Tesla will either sell at a major premium or won't sell cars at all. All the cars they make go to their network.

Personally I think it is all a few years away. But I'm looking forward to NOA on city roads and parity with Waymo that will greatly boost the valuation.

 

[CarlK]

Carl, help me with this. Let's say everything goes according to plan deux and Autonomy Day, and owners who sign up for the Tesla Network earn up to $30K/year. What does that do for demand for new and used Tesla cars, and for their price? They should sell for much more, at least until supply catches up with demand, which presumably would take a long, long time (every other manufacturer will be selling horses). Does Tesla intend to start pricing cars at equilibrium (say, $100K), or "give" them away at roughly current prices? Which of these best meets Elon's goals, but also the goals of his investors?

Market always decides price. Tesla certainly will adjust price of FSD and fees to TeslaNet according to demand. One advantage of Tesla's sales model is it could adjust price dynamically as it often does. Looks Tesla will raise the price of FSD gradually as the FSD becomes more mature and demand rises, although i believe more likely it will go up to ~10K rather than to ~100K. This would generate extra income for Tesla in the interim until TeslaNet is implemented and robot taxi becomes reality. After that most income will be coming from fees and commissions in addition to its own fleet when necessary. So my guess is robot taxi income will come more from the service than from selling the car. Although like the Apple model you have to sell devices before you can sell the service.

With this model I think people who bought a car today would see only perhaps ~$10K advantage than ~$100K advantage. Great if you will use FSD for yourself but insignificant if you want to buy the car for income generating purposes. Regardless other cars would still be like horses in the sense that you will never be able to let them to run on their own.

 

[EVNow]

After that most income will be coming from fees and commissions in addition to its own fleet when necessary. So my guess is robot taxi income will come more from the service than from selling the car. Although like the Apple model you have to sell devices before you can sell the service.

According to fairly conservative model by ARKK, a robotaxi can generate $100k a year in revenue (net of all costs except depreciation) charging just $1/mile (vs $2 that Uber/Lyft charge). So, there is really no reason to sell the car at all (it will be acquired by a businessman planning to put the car on service and earn that $100k a year), unless they sell for such a price that the businessman makes only a reasonable IRR (like 20%) - which happens to be about $200k for the car+FSD (and 30% revenue on TN).

 

[CarlK]

According to fairly conservative model by ARKK, a robotaxi can generate $100k a year in revenue (net of all costs except depreciation) charging just $1/mile (vs $2 that Uber/Lyft charge). So, there is really no reason to sell the car at all (it will be acquired by a businessman planning to put the car on service and earn that $100k a year), unless they sell for such a price that the businessman makes only a reasonable IRR (like 20%) - which happens to be about $200k for the car+FSD (and 30% revenue on TN).

There are still benefits for Tesla to sell cars to individuals to put on TeslaNet. It will not need to put out capital expenditures for one or two million cars and still be able to get revenue from collecting commissions. It's essentially having everyone to finance those robot taxis for Tesla. You're talking up to $100 billion capitals here. Besides there will still be people who just want to buy a car, driven by robot or not, for own uses. It will be nice to buy a car that comes with a 7/24 chauffeur that could do a lot things for you. It's not saying eventually Tesla would say we really don't need individual car ownership but that would still be far far away.

 

[EVNow]

There are still benefits for Tesla to sell cars to individuals to put on TeslaNet. It will not need to put out capital expenditures for one or two million cars and still be able to get revenue from collecting commissions. It's essentially having everyone to finance those robot taxis for Tesla. Besides there will still be people who just want to buy a car, driven by robot or not, for own uses. It will be nice to buy a car that comes with a 7/24 chauffeur that could do a lot things for you.

Tesla will have zero problem getting capital to build a 40k car that generates 100k in the first year.

I’m sure people would want to buy Tesla cars - but every car sold at 50k is a 200k loss of profit for Tesla. Not going to happen.

 

[Dr. J]

Tesla will have zero problem getting capital to build a 40k car that generates 100k in the first year.

I’m sure people would want to buy Tesla cars - but every car sold at 50k is a 200k loss of profit for Tesla. Not going to happen.

Well, hang on. There's more to robotaxis than picking up fares. There's car storage, which if the car is sold to an individual, Tesla doesn't have to worry about. There's fleet maintenance. There's charging. All of these things Tesla avoids by selling to individuals who join the fleet rather than owning the cars themselves.

 

[CarlK]

Tesla will have zero problem getting capital to build a 40k car that generates 100k in the first year.

I’m sure people would want to buy Tesla cars - but every car sold at 50k is a 200k loss of profit for Tesla. Not going to happen.

Tesla still gets a share of that profit which is going to be a lot of profit. Remember that's income with zero investment and no risk while other people are purchasing the money printing machine for you.

Uber and Lyft have a combined ~5 million drivers. There will be a need of at least that many robot cars but could be a lot more because lower cost and better convenience it offers could draw (a lot) more customers to it. Many people, especially women, still don't feel comfortable getting into stranger's cars. It's great if Tesla could get capitals to build that many cars but I would think selling cars is still the fastest way to saturate the market.

Well, hang on. There's more to robotaxis than picking up fares. There's car storage, which if the car is sold to an individual, Tesla doesn't have to worry about. There's fleet maintenance. There's charging. All of these things Tesla avoids by selling to individuals who join the fleet rather than owning the cars themselves.

Those are all good points. Pretty much the reason why Uber/Lyft could beat taxi companies in cost.

 

[EVNow]

Tesla still gets a share of that profit which is going to be a lot of profit. Remember that's income with zero investment and no risk while other people are purchasing the money printing machine for you.

When you can get 100%, why settle for 30% ?

Risk is all in FSD - whether others own the car or Tesla.

 

[voyager]

46 companies involved in vehicle autonomy development, according to this Sept. 2018 overview:
46 Corporations Working On Autonomous Vehicles

 

[CarlK]

I know what you're saying. Everyone is trying to get into the game because of what Tesla and Waymo had done. Even I want to recruit a few engineers, I know quite a few good ones, and get a few suckers, I know quite a few of them too, to invest some money to start a self driving car company. Although I know I have zero chance of success like most, if not all, of those companies.