Unlock Editor's Digest at no cost
Roula Khalaf, editor of the FT, picks her favorite stories on this weekly newsletter.
One of Elon Musk's most consistent traits is his tendency to make guarantees he doesn't keep. In 2018, for instance, he vowed to launch his own brand of confectionery – a plan that, despite just a few trademark registrations, has yet to yield sweet returns. On Thursday, the Tesla boss made an even bigger claim: His self-driving taxi may very well be in production by 2026. This latest enterprise is more credible, but not by much.
Autonomous rental vehicles, just like the one Musk demonstrated at a live event called “We, Robot,” are almost definitely the long run. Driverless taxis are already transporting passengers in San Francisco, courtesy of Google subsidiary Waymo. In comparison, driving the Tesla “Cybercab” could cost as little as 30 cents per mile 81 cents This is how much it’s going to cost to operate a automobile within the USA in 2023. While the typical automobile drives lower than two hours a day, robotaxis could drive 10 times as much, he suggests.
Since Musk loves throwing around big numbers, here's a rough idea of what it's all about. Americans drive roughly 3 trillion miles per yr. If 10 percent of those trips were shifted to robotaxis and passengers paid about $1 per mile it costs to ride a city bus, $300 billion in revenue may very well be generated. At an operating margin of fifty percent, valued at 15 times the operating profit generated by automakers like Ford, that's value greater than $2 trillion.
Such figures are after all pure speculation, but there are even wilder estimates. Florida-based technology fund Ark Invest estimates the worth of Tesla could reach $8 trillion90 percent of them from robotaxis. Musk himself said that the cybercab could increase the corporate's value to $5 trillion. This doesn’t include any theoretical contribution from the still-in-development humanoid robot Optimus, which Musk describes as potentially “the best product of all kind.”
Little of that is included within the share price in the meanwhile. Tesla's market value was $760 billion on Thursday. Admittedly, in keeping with LSEG, that’s 30 percent of the worth of all listed automobile manufacturers. But this premium valuation is more resulting from Musk's previous guarantees to significantly increase production of electrical vehicles, including the introduction of a comparatively inexpensive $25,000 model. Shares are up 45 percent since Tesla announced a “Robotaxi Day” but are down 40 percent since their 2021 peak.
The skepticism is justified. Google, Amazon and General Motors are also vying for supremacy in robotaxi. Before trips may be approved, several supervisory authorities should be convinced. Musk also has a habit of being light on deadlines: in 2015, he predicted fully autonomous cars by 2018. Even Thursday's big reveal was originally scheduled for August. Investors may consider within the Tesla boss's entertaining vision, but could be smart to not bet their fortunes on it.
