Tesla looks to launch human-driven Uber/Lyft competitor before robotaxi rollout

One of Tesla’s future plans is to roll out a network of self-driving “robotaxis,” dubbed “Tesla Network.”  In today’s Tesla shareholder meeting, CEO Elon Musk fielded a question from a shareholder about the possibility of having a human-driven rideshare fleet prior to the rollout of Tesla Network.

This would be similar to Uber/Lyft or other rideshare services, but driven through an owner’s own Tesla app which they already have installed.

Musk seemed responsive to the idea, stating that while the end goal is to have autonomous ridesharing, this might be a good stopgap prior to Tesla gaining regulatory approval for their robotaxi fleets.

The question came up from shareholder Francois H. on Tesla’s public page aggregating questions for the meeting:

“Would Tesla Condisder Pushing out an update to its App for Ride Share Service soon so at least for both Tesla and Current Owners as an easy way to make revenue now and fix bugs along the way till they get to FSD and Robo Taxis in the future with no Driver?”

This has been suggested before but Musk previously didn’t seem interested in the idea and preferred to wait for full self-driving capability before launching any type of ride-sharing service.

For the first time today, he appeared open to the idea of launching the service with human drivers.

Similar to the way that the current autopilot beta software works, this would give Tesla real-world practice at fixing bugs in the system under human supervision.  Not only would this help the rollout of the software because bugs could be fixed ahead of time, but owners could also benefit financially from it.

Given that the Model 3 is one of the most efficient cars ever made and doesn’t require annual service, it can be an ideal car for ridesharing service, where drivers can keep a bigger share of their earnings if their running costs are low.

We have no details yet on how this system might work, but if it’s anything like Uber and Lyft, it could be a huge financial boon not just for drivers but for Tesla itself.  Those companies currently have market caps of $72 billion and $17 billion respectively, while Tesla’s current market cap is $38 billion. If Tesla gained just a fraction of the market that Uber and Lyft has, that could result in significant future revenues for the company.

Not to mention Waymo, Google’s self-driving taxi startup, which recently was valuated at over $100 billion.

Musk also reiterated today that Tesla still plans to have 1 million cars on the road capable of becoming robotaxis by the end of next year.  While cars being delivered today are not equipped with the hardware or the software for full self-driving, the former is a matter of a service visit for a computer swap and the latter is only a software update away.

So as long as that hardware and software is ready, at today’s production numbers, there will be 1 million Tesla vehicles built by then which have this capability.

Regulatory approval is another question, though.  Whether or not cars are capable of driving with no human assistance by the end of next year, governments will have to allow this to happen.  That seems at least as unlikely as the technical capability being available, especially with the level of lobbying we’ve seen at all levels to try to stop EVs.

Whether it’s punitive, unfair taxes on EVs being pushed by the Koch brothers, relaxed fuel economy restrictions being pushed by automakers, direct-sales bans being pushed by dealership groups, or anti-public-charging campaigns being pushed by the oil industry, Tesla and EVs are being attacked on all fronts.  You can guarantee that all automakers which don’t have a self-driving system, all taxi organizations, and likely the other ridesharing apps will resist Tesla Network as soon as it becomes technically feasible (and beforehand, as well).

Electrek’s Take

Musk is often optimistic about timelines, and “robotaxis by 2020” seems to me like another instance of that.  While Tesla’s Autonomy Investor Day was reassuring in many ways, it still seems very unlikely that cars will be able to drive with nobody in them just a year and a half from now.

Autopilot does get better all the time, and is better now than when the Model 3 came out.

In my Model 3 review, I mentioned how the car was designed with Tesla Network in mind.  Even years before this idea is technically possible, Tesla designed and built a car which has features focused on complete autonomous driving. The phone-as-key, internal camera, and design of the central display are all autonomy-focused design touches.

What’s interesting about this is that it’s very rare for automakers to release a car which is designed to be future-proofed. Usually, if a new capability comes in, automakers use that as a method to sell the new model year, to get old owners to upgrade their cars.

Tesla, however, isn’t doing this. They can do so because they are still a small company, and the market isn’t saturated with their products (well, except some parts of California and Norway).

While most automakers would not want to do this because they feel it would cut down on future demand from customers who want an upgrade to the latest mode, this mentality will actually make Tesla more nimble when fully autonomous driving becomes available.  Since Tesla will have more than a million cars on the road by then which are capable of being driven autonomously, all they need to do is flip a switch and they’ll instantly start dominating taxi and rideshare markets. They won’t need to build a million more cars, they won’t need to convince customers, they’ll just need to push a software update.

Of course, this all depends on fully autonomous driving being possible with the Tesla system, and it depends on Tesla beating other automakers to the punch. Tesla so far has gone their own way with their vision-focused autonomy system (rather than LIDAR), so there’s no guarantee that they will win the race. But if they do, you can add those Uber and Lyft market caps right on top of Tesla’s that very same day.