Tesla, the world’s leading electric car company, has made its plans for 2020 well-known: by the end of next year, the company is poised to release 1 million self-driving cars on the road. In addition, Tesla’s new RoboTaxi service will be a critical component of the fledgeling Tesla Network as it develops. And, it’s newest Model 3 car is the ideal prototype.
But the surprises don’t stop there with this fortune 500 company. In a recent shareholder meeting, Musk was asked a question, the answer to which could potentially make huge waves in in the ridesharing market:
“Would Tesla consider pushing out an update to its App for Ride Share Service soon so at least for both the company 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 wasn’t the first time that Musk had been approached with this suggestion. However, it was the first time that he had shown any real interest in it. In the past, Musk has been resistant to the idea of offering ridesharing services similar to that of Uber and Lyft. He has preferred instead to focus on the self-driving aspect of his vehicles. However, during this meeting, he acknowledged that a ridesharing service is a good idea.
In fact, he considered it a win-win situation. If he launched his new service with human drivers, not only could the company make a considerable amount of revenue, but they could also use human drivers to test out and get rid of bugs for their self-driving technology. There would also a big benefit to the drivers. Given that the Model 3 is low maintenance and doesn’t require annual service trips, drivers would be able to keep more of their profits.
When it comes to the timeline, it’s very easy to be skeptical about Musk’s plan. After all, 2020 is an extremely optimistic deadline, to say the least. And Musk does have a tendency to overshoot. In fact, when you consider the that Teslas have neither the hardware nor the software for full self-driving, it seems downright impossible. However, it’s important to keep in mind that the hardware can easily be changed out in one service visit. Also, the software can be updated at any given moment.
At this point, the only thing that stands in the way of both the robotaxis and the rideshare services is government regulation. The technology may be there and the plans may be perfectly outlined, but if the government doesn’t approve of self-driving vehicles then it’s not going to happen. And, unfortunately for the company, there are many obstacles that could complicate this process with all of the lobbying against the electric car and even the Tesla itself.
Not everyone is excited about companies like Musk’s. And they’ve definitely made their positions on the issue known. Everyone including automakers, dealership groups, the oil industry, and even the Koch brothers are rallying for certain interests and all of these interests seem to go against that of this Tesla’s.
The automakers are doing everything that they can to achieve relaxed restrictions on fuel economy. The dealership groups are asking for a ban of direct-sales. The oil industry is pushing against electric charging. And the Koch brothers are suggesting that those who own electric vehicles be taxed yearly. This will inevitably lead to an uphill battle, both before and after the regulation is approved.
If Tesla is somehow able to overcome all of these objections and secure the regulatory approval it needs, it would immediately open the doors to an even bigger multibillion-dollar market. The top rideshare companies have impressive market caps. Lyft has a market cap of $17 billion, Uber has a market cap of $72 billion, and Waymo, a self-driving taxi company started by Google, is worth of $100 billion.
This means that a tiny percentage of the rideshare market could be very profitable. However, while even a fraction of this market would give the fortune 500 company’s current market cap of $38 billion a huge boost, the company seems to have plans to do far more than just take a small piece of the pie. With the release of the Model 3, it looks as if the company is positioning itself to eventually dominant in the industry.
You see, what makes the Model 3 most appealing and exciting are it’s autonomous design features … something that most automakers would capitalize on and advertise to its old customers so that they could upgrade to the newest model. But this is where Musk’s company goes against the grain. Instead of holding these features back from their customers, they’ve given them the option. And, when self-driving is eventually approved, the company’s Tesla Network will instantly be activated. So, in essence, this electric car is future-proofed.
This is made easy by the fact that the company is small. The market has yet to be saturated with its products. Once self-driving has been approved by the government, the only thing the company will need to do is deploy a software update. In an instant, the everyday electric vehicle could become a self-driving taxi. And, this means they won’t have to worry about building more cars or advertising to customers.
This isn’t to say that everything will go as smoothly as planned. There are a couple of things that could potentially block the company’s efforts as it concerns dominating the market. First, its system needs to be capable of true autonomous driving. Secondly, the company needs to be able to beat its competitors to perfecting this particular technology.
Tesla has followed its own path when it comes to the autonomy system. So far, theirs has been vision-focused while the standard is LIDAR. So this could have a significant impact on how quickly they’re able to implement change. While there is no guarantee that Tesla’s RoboTaxi will come out ahead, if it does succeed, there is no doubt that it’s market cap will soar.
Tesla, Inc.: Company Website