A change in coming to transport. Currently, we have 1.2 billion cars in the world, and most are owner-driver. There are fleet vehicles but in Australia there are 8 million households and 2.1 vehicles per household.
An impending change is from owner-driven to Transport as a Service. (TAAS)
- Utilisation increases from 4% to 40%
- Cost per mile (or km) comes down from around US 60cents per mile to less than 5 cents
- Fleets will be owned by companies not individuals
- The anticipated timetable is less than 10 years
- The change is dependant on full self driving (no operator) and that will be somewhere in the next 1 to 3 years.
- The first introduction will be to displace the approximately 300,000 taxis in the USA, and the 1 million ride share companies. In Australia there are about 40,000 taxis and 100,000 ride share operators. So there could be 200,000 robotaxis in Australia and 2 million in the USA with no demand / supply reduction in value.
Will Teslas make Robotaxis economic? Follow the model below to make your own mind up.
For a full background, I suggest you follow and digest the story from Tony Seba in his research from RethinkX. An extensive report “Rethinking Transportation 2020 to 2030” proposes that a change from individual ownership to “Transport as a Service” or TaaS” will one of the major disruptions in the decade. You can read the report on Rethinkx.com website, or read my blog here. Autonomous electric cars will displace individually owned internal combustion engine cars. Many see the EV displacing ICE cars, but not individual car ownership to TaaS. But it seems that this is a business AND social opportunity so I see an opportunity for everyone.
Tesla makes Robotaxis Economic!
- Tesla makes about 20% GP on its cars – a bit higher than BWM or Ford or on a car about $10,000 per sale so the ability to earn hundreds of thousands more will be top of their mind. It turns the industry from auto making to a software business with margins over 50%.
- Tesla would be tempted to stop sales to private customers, and just use them as robotaxis, with a huge increase in profits. Tesla and owners Would make hundreds of thousands over 10 years.
- There will be no supply – demand pressure until the existing taxis and ride share are displaced and as the price comes down the reason to own your own car drops – which increases the market size.
- I.e. The price to consumers dropped by 50% (say) then more people would move to robotaxis
- There appears to be a business opportunity to either own the vehicle yourself or for the Fleet Operator.
- When will this happen? 2023 / 2025? Hard to see how this will not happen due to economic and technology? But politics and regulation will change the timeline, but probably not long. Ride share disrupted the taxi industry in a few years.
What is the Opportunity for the Vehicle Owner?
Based on a number of assumptions, a vehicle owner could buy (or finance to buy) a Tesla Cybertruck at AUD$106,000. The vehicle is then contracted to a vehicle maintenance company to operate as a robotaxi. Like a taxi fleet owner used to buy a license plate, turn the plate over to a taxi company and driver, and get passive income.
My guess is that you will earn about $160,000 gross, per year with a cost of a lease of $32,000 each year for the first 5 years. So the net return will be about will be AU$140,000 per year for 10 years.
Too good to be true – do the maths yourself.
The Model in Summary
|The average cost of taxi or rideshare||$4.00||Gazetted Brisbane taxi costs 2021|
|Driving distance lifetime||1,600,000||Tesla warrants 1 million miles|
|Robotaxi expected km per year||160,000||Private vehicles have 4% utilisation (12,500 km per year – RACQ data). Robotaxis to be 40% utilisation|
|Lifetime of vehicle||10||This figure from Tony Seba on robotaxis|
|Capital Cost of Vehicle||106,000||Tesla $US80k which includes FSD on website|
|Lease – interest & repayment over 5 years||$32,000||Per year lease costs (based on 10% interest, 5 years repayment).|
|Therefore total money to be shared among all parties over 10 years.||$6.4m||Gross revenue. Does not include licensing, operating costs or a lower cost to the consumer.|
|Annual shared value.||$640,000||Who benefits from this?|
|How is that split – Assumptions||Percentage||What’s is that benefit per year?|
|Maybe the passenger has a 30% cheaper ride||30%||Gets a ride for $2.33, not $4.00|
|Tesla (for their software)||20%||$106,000|
|Fleet operator – maintains, cleans, charges||20%||$106,000|
|Owner (owns, leases)||30%||$160,000|
|For the owner, So over 10 years, that is $1.44m return over 10 years||For the robot taxi manufacturer|
this increases their net profit
How Much is Full Self Driving Worth to Tesla
Dave Lee with James Douma meander through this video talking about Teslas and robotaxis. The discussion on robotaxis starts about 1:04:17 – but if you can stick to the whole video it may be worth your while.