Tesla's Robotaxi Future Upside

Video Length: 00:23:56

(The above video covers similar and additional Tesla (Nasdaq:TSLA) topics discussed in this report. Included in the video are comments on our 2022 EPS and target, RoboTaxi, Bitcoin, Fund managers, all as it relates to Tesla.)

In our last Tesla report, we wrote about Full Self Driving (FSD), its importance, and potential impact in 2021 earnings. Achieving FSD will unlock the potential for Tesla’s RoboTaxi Program.

Cars Parked In Front Of Company Building

Image Source: Pexels

The RoboTaxi program is a ride-hailing service, similar to Uber (Nasdaq:UBER) or Lyft (Nasdaq:LYFT), that aims to use Tesla cars to transport people around. The program intends to leverage FSD and the network of Tesla to provide ride-hailing services without the need for a human driver. According to Musk, the network would be composed of both company-owned and private cars.

The RoboTaxi program aims to change the concept of car ownership by allowing Tesla owners to use their car when they need to, but rent it whenever they’re not using it.

"You've got the car you have to share with friends and family. You can add or remove it from the network. You can have it be entirely in the network. I mean, if you're an Uber or Lyft driver, you could be managing a fleet of 10 cars. This sort of seems like a shepherd tending the flock type of thing." - Elon Musk

Above you get an idea of the huge fleet of cars available to this potential Tesla RoboTaxi network.

Musk outlined a process to launch the RoboTaxi service:

  1. Complete full self-driving software: FSD currently requires a human driver in case of any malfunction. However, with so many miles of data, Tesla says it can achieve FSD in the coming year. In our previous report we go into more detail on the state of Tesla’s FSD plan.

  2. Roll out the RoboTaxi software. This part is probably the easiest one, since a ride-hailing app should be fairly easy compared to the FSD software. In the early stages, Tesla could roll out the software but still require a human driver to ensure it's completely safe.

  3. Remove the need for a human driver: This would require level 5 driving automation and regulatory approval. Years ago, Musk said that to get regulatory approval, the company would need around six billion autopilot miles. In April of 2020, they reached half that milestone.

The Market

In the short run, Tesla will compete in the ride-hailing taxi app market, against brands such as Uber and Lyft. Fair to say this is expected to be a large market.

The key points for the RoboTaxi program to succeed are:

  1. Price: The fare ride price is one of the most significant factors between competitors.

  2. Wait time: How long people will need to wait to get a ride. This factor will depend mostly on the fleet size of the company and its relation with demand. This ratio will determine the vacant cars the company has near you.

  3. Territory: Especially at the beginning, RoboTaxis won't be capable of arriving at all destinations, so the wider the range, the higher the opportunity to take more market share.

  4. Brand & Style/Luxury & Features: Companies will need to offer different brands and levels to capture all kinds of targets, even though it's not the most important topic, customers value the nameplate of the car.

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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am ...

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James Madison 3 weeks ago Member's comment

They are using $FRSX tech.