Elon Musk: Tesla will stop selling cars once full self-driving is solved

[interestedinEV]

Elon Musk: Tesla will stop selling cars once full self-driving is solved

https://electrek.co/2019/07/08/tesla-will-stop-selling-cars-full-self-driving-elon-musk/

Here is the gist, if Tesla is able to sell a fully autonomous cars, they will run a taxi service and recover the cost of the car many times over.

The numbers are incredible (if true).

....If all those things become true, then Tesla has a choice between selling a car for $40,000 once or keeping that car and operating it as a robotaxi and generating perhaps ten times that amount over the life of the vehicle. If that’s the case, then the company would be foolish to sell the car and miss out on that future profit potential........

And Tesla shared some numbers showing that they think this will be the case. At their recent Autonomy Investor Day, they showed a slide suggesting that an average robotaxi would be able to bring in $330,000 worth of profits over its useful lifetime. In keeping with this projection, Tesla recently raised the price of the still-unreleased full self-driving option (just a couple months after temporarily lowering it in a pretty shady way).


No wonder Wyamo is going for Robotaxis, there is so much money to be made. Now again, this is still a moon shot, but we did get to the moon and will get there again. However, I expect Tesla will still be selling cars 10 years from now to the general public. We are still not in the near Jetson era.

 

[SD_dad]

This has always been the plan.... Look at the cost of running a taxi. 90% of it is fuel and the driver. Once those are removed from the equation, there is little reason to own a car that is used less than 4% of the time since the cost per mile would be significantly less than ownership. I predict that Tesla will actually offer very generous buy backs of all models that are capable of autonomous driving and increase their fleet in weeks not years.

Waymo just got approved for an autonomous driving in CA. I'm very optimistic on this but it is still at least 7-10 years out before wide spread adoption. I wouldn't call it a moonshot considering that this is only a matter of time before becoming a reality and just a matter of who is going to get there first.

 

[bwilson4web]

Elon has a subtle sense of humor.

Bob Wilson

 

[interestedinEV]

This has always been the plan.... Look at the cost of running a taxi. 90% of it is fuel and the driver. Once those are removed from the equation, there is little reason to own a car that is used less than 4% of the time since the cost per mile would be significantly less than ownership. I predict that Tesla will actually offer very generous buy backs of all models that are capable of autonomous driving and increase their fleet in weeks not years.

Waymo just got approved for an autonomous driving in CA. I'm very optimistic on this but it is still at least 7-10 years out before wide spread adoption. I wouldn't call it a moonshot considering that this is only a matter of time before becoming a reality and just a matter of who is going to get there first.

While I said moon shoot, I thought I had clarified, it is achievable but going to take a lot more work.

The technology is there but the question is full self driving capabilities under most boundary conditions. Can the car drive in pouring rain, handle road construction delays, navigate un-mapped areas etc. I think we are still a ways from that. We may get to driving in most conditions in a few years time and 7-10 seems reasonable. To have a system where no one owns cars, and everyone just rents when they want is still something that I cannot get my head around. For many urban dwellers, especially in large cities, this might make sense. For people who live on farms or distant areas, people who like to get behind the wheel and drive, this arrangement is not going to have their needs met. I guess you can have a two type system, manufacturers who make cars for the DIY (drive it yourself, pun intended) people and manufacturers who make cars for internal consumption by their taxi fleet.

You may a good point about costs. In addition there will be lower maintenance in EVs and insurance costs may actually go down as it will be safer (no going over speed limits, no DUI etc.)

 

[Pushmi-Pullyu]

Here is the gist, if Tesla is able to sell a fully autonomous cars, they will run a taxi service and recover the cost of the car many times over.

The numbers are incredible (if true).

Yes, I think this plan is literally incredible... as in, not credible.

It's unclear to me if Elon is just shoveling out the hype in a manner which, unfortunately, investors have come to expect -- if entrepreneurs are not hyping their business with castles-in-the-sky rhetoric, then they must not believe the business can succeed! -- or if this is one of Elon's pie-in-the-sky pipedreams, like his previous repeatedly stated concept of increasing output of factories by 5x or even 10x by replacing all human labor with automated systems and robotic arms moving at eye-blurring speed.

Well, that didn't work out so well, did it? And the early months of production of the Tesla Model 3 suffered as a result, as Elon went through the rather painful learning experience that no, robots can't do everything better -- or even as well -- as humans can. This wasn't exactly news for anyone who has watched the painfully inept manner in which robots perform in DARPA's robot challenge contests. Just as expected by myself, and probably by everyone with much experience in heavy industry manufacturing, Elon's belief that he had found a way to tremendously speed up factory output in a way that nobody else had ever thought of, was wishful thinking. I see this idea of turning a fleet of used Model 3's (those coming off 3-year leases) into a vast fleet of highly profitable robotaxis much the same way, as completely unrealistic and utterly impractical.

In the real world, taxi fleet operators will like robotaxis because it will allow them to eliminate the expense of the human driver, and allow them to offer fares at a lower cost. But that's about the only change it's going to create. The average person isn't going to suddenly decide he is gonna give up the convenience, freedom, and safety of having his own car available for use anytime he needs it, just because his car now has a robotic chauffeur!

Now, that's not to say that fully autonomous cars won't have a significant impact on our culture and our cities. Self-driving cars will be much safer than human-driven ones, significantly lowering the cost of insurance. That lower cost will lead to a significant increase in the number of cars on the road -- exactly the opposite of the decrease which a lot of people are claiming!

Just think of all the people who now don't own cars because they can't drive them: The elderly, the handicapped, the younger generation who can't afford the rising cost of ever more expensive cars and the rising cost of insurance. Cars will once again become a practical option for many or most of those people.

Personally, I just don't buy this idea that self-driving cars will make private car ownership largely a thing of the past. Not even in urban areas, let alone the suburbs or rural areas, where that would be even less practical! Believing that most people will replace their personal car with depending on robotaxis is no more realistic than believing that people renting out bedrooms in their home on Airbnb will cause most national hotel chains to go out of business.

All just my opinions, of course. YMMV.

 

[galderdi]

The world has changed over the last decade or two. There is no such thing as a blue chip company any more. Companies previously targeted a percentage of growth by increasing their market or decreasing their costs. From now on companies that continue to rely on these methods alone run the risk of extinction. The companies of the future are those willing to be the disruptors. Those that aren't disrupting will be disrupted and cease to be viable. Being a disruptor relies on radical visions + some ability to actually get there. I think Elon is on the right track. It doesn't guarantee success, but in this new age a lack of vision guarantees failure.

 

[interestedinEV]

Yes, I think this plan is literally incredible... as in, not credible.

It's unclear to me if Elon is just shoveling out the hype in a manner which, unfortunately, investors have come to expect -- if entrepreneurs are not hyping their business with castles-in-the-sky rhetoric, then they must not believe the business can succeed! -- or if this is one of Elon's pie-in-the-sky pipedreams, like his previous repeatedly stated concept of increasing output of factories by 5x or even 10x by replacing all human labor with automated systems and robotic arms moving at eye-blurring speed.

Or the Boring company claiming to build a tunnel from the Loop to ORD for less than a billion. It looks like the project has buried underground (pun intended). Elon has been keeping the stock price up and some of it is due to hype. One day we may see a driver-less fleet of robo taxis, but operating within some bounds. The rest will be will have some sort of manual intervention and hence there is hype here.

Yes, I think this plan is literally incredible... as in, not credible.
Just think of all the people who now don't own cars because they can't drive them: The elderly, the handicapped, the younger generation who can't afford the rising cost of ever more expensive cars and the rising cost of insurance. Cars will once again become a practical option for many or most of those people.

True, but the reverse side is the elderly might prefer a cheap taxi service at their call instead of owning cars. More freedom, less responsibility. So some people who could own cars, might ditch cars just as some people are renting even though they could own the house. Parking space in urban areas is not going to get cheaper, so if insurance reduces, parking will increase. Also robo taxis will help the sick, people who cannot drive due to medical conditions and possibly even those cited for DUI.

Yes, I think this plan is literally incredible... as in, not credible.
I see this idea of turning a fleet of used Model 3's (those coming off 3-year leases) into a vast fleet of highly profitable robotaxis much the same way, as completely unrealistic and utterly impractical......... The average person isn't going to suddenly decide he is gonna give up the convenience, freedom, and safety of having his own car available for use anytime he needs it, just because his car now has a robotic chauffeur!
....
Personally, I just don't buy this idea that self-driving cars will make private car ownership largely a thing of the past. Not even in urban areas, let alone the suburbs or rural areas, where that would be even less practical! Believing that most people will replace their personal car with depending on robotaxis is no more realistic than believing that people renting out bedrooms in their home on Airbnb will cause most national hotel chains to go out of business.

All just my opinions, of course. YMMV.

I agree with most of what you say, but I see it as more as a two systems co-existing. One is a set of manufacturers who manufacture, sell and service cars with autonomous driving features to the general public and these cars will have manual overrides for the driver to take over. The other are manufacturer/transportation companies who build cars and vans and trucks, use them in their captive taxi and transportation fleets and cater to those people who do not want to deal with hassles of ownership and are able work within the limitations of the robo taxi fleet. This means users agree to geographical limitations, as well non availability under certain circumstances. In essence, many give up cars, but there is a large enough base to sustain ownership of cars

That is my 1 -c- and I have known to be wrong, so take it for what it is worth.

 

[Pushmi-Pullyu]

Or the Boring company claiming to build a tunnel from the Loop to ORD for less than a billion. It looks like the project has buried underground (pun intended).

Well, that's a different subject. I view Elon's vision of a VIP-only, very low traffic density underground road system which only the very rich will be able to afford, as merely a super-rich man's daydream-turned-hobby. I don't see it as anything even remotely close to being a realistic goal.

An economic analysis of such a VIP-only transport system supported by taxes, and why that will never be developed in the real world, is detailed here:

The Dangers of Elite Projection by Jarrett Walker

...the reverse side is the elderly might prefer a cheap taxi service at their call instead of owning cars. More freedom, less responsibility. So some people who could own cars, might ditch cars just as some people are renting even though they could own the house.

This is an entirely valid point which hadn't previously occurred to me. So thanks for your input!

However, and not in any any way detract from your excellent point, the overall result of any desirable human activity becoming cheaper is an increase in that activity. (See: Jevons Paradox) Running counter to the situation you cite, is the situation where some people who now rely on mass transit for commuting would switch to robotaxis, because when taxis have lower fares then it will become somewhat more attractive to use them in preference to buses, light rail, and commuter trains.

Parking space in urban areas is not going to get cheaper, so if insurance reduces, parking will increase.

Well, it's entirely possible that with fully self-driving cars, after the autonomous car delivers someone to their destination, the passenger(s) will send their car out of the area to park, to be summoned when needed. At the very least, the idea of parking within walking distance of the destination will become mostly a thing of the past. Parking should shift to where it's cheap or free, rather than where it's within walking distance.

So it's entirely possible that the demand for high-cost parking in downtown areas of the city will be rather reduced. My speculation is that this would lead to some high-rise or underground parking lots being closed and/or demolished. At the very least, the need for parking near where you're going will be rather diminished.

Some have pointed out that, in areas without nearby free parking, people might have their self-driving car keep driving around the block until they need it, thus actually increasing traffic congestion rather than relieving it. I hope that won't happen, but I can certainly see that it might unless steps were taken by cities to discourage that activity, which would waste energy in addition to increasing traffic congestion in downtown areas.

Also robo taxis will help the sick, people who cannot drive due to medical conditions and possibly even those cited for DUI.

Yeah, in previous comments on this subject I've included the category of people who can't drive because they lost their license. Thanks for adding that; I shouldn't have left it out.

I think the proper way to look at it is this: With fully autonomous cars, every car will come equipped with its own robotic chauffeur. Today, only the very rich can afford chauffeurs. With fully developed autonomous cars, anyone who can afford a car can afford a chauffeur to drive it!

The other are manufacturer/transportation companies who build cars and vans and trucks, use them in their captive taxi and transportation fleets and cater to those people who do not want to deal with hassles of ownership and are able work within the limitations of the robo taxi fleet.

I don't see this as happening, despite Elon claiming that Tesla will get into the business of running a very large fleet of robotaxis. Making and selling automobiles is a heavy manufacturing business, and running a taxi fleet -- robotaxis or not -- is a service industry. I don't see the two merging, any more than cell phone providers actually make their own phones. (So far as I know, even AT&T doesn't actually make its own phones.) And Apple isn't getting into the business of offering cellphone service, either.

I'm sure that people can point to service businesses which sell products with their brand name on it, but -- and I could be wrong here -- I suspect every one of those will be light industry products (Amway would be one example), made without the need for the very high capital investments of mass producing automobiles. More often, it's just going to be products licensed by the service business to put the latter's label on a product made by some manufacturing company.

* * * * *

@interestedinEV : Thanks for the discussion! I'm really enjoying this, and I wish there were more in-depth, productive discussions/ debates like this one.

​

 

[bwilson4web]

I was mulling this thread earlier today and it occurred to me:

• robo-taxis - will collapse the UBER market with a factor of five reduction in costs
• collapse of the UBER/taxi market means those expecting great profits will be disappointed
• it will make more sense to sell 'cars' instead of 'wishful' calls for a robo-taxi

I distinctly remember arriving in Huntsville via bus from Nashville at ~2 AM and finding there were no UBER drivers volunteering to take me home. Instead, I called on a Red Top cab and got home 30 minutes later.

If taxi companies decide to automate their fleet, I'm OK as long as they remain 24x7. But I've seen too many "$20" UBER fees to get from home to University Blvd to pickup my BMW i3-REx. The same d*mn price as a 24x7 taxi.

H*ll NO! I want my cars to serve my needs and requirements and no dependency upon the 'good will' of taxi or UBER 'services.'

Bob Wilson

 

[interestedinEV]

Well, that's a different subject. I view Elon's vision of a VIP-only, very low traffic density underground road system which only the very rich will be able to afford, as merely a super-rich man's daydream-turned-hobby. I don't see it as anything even remotely close to being a realistic goal.

An economic analysis of such a VIP-only transport system supported by taxes, and why that will never be developed in the real world, is detailed here:

The Dangers of Elite Projection by Jarrett Walker.......

I don't see this as happening, despite Elon claiming that Tesla will get into the business of running a very large fleet of robotaxis. Making and selling automobiles is a heavy manufacturing business, and running a taxi fleet -- robotaxis or not -- is a service industry. I don't see the two merging, any more than cell phone providers actually make their own phones. (So far as I know, even AT&T doesn't actually make its own phones.) And Apple isn't getting into the business of offering cellphone service, either.

I disagree with you here. Elon was engaging in hyperbole or exaggeration, knowing that risks were enormous. I do not think that they thought it through. Elon shoots first and then looks and if there is collateral damage, tries to cover it up or brazen out of it. As much as he is a visionary, he is also a push the envelope and if it crosses the line, too bad type of person.


More I think of it, more I feel that Elon is trying to drum up sales now with his statement that he will not sell cars to the public. Create a sort of panic that Tesla's will not be available very soon and so you better buy it today, here and now. Again people may say that, even if true, it will be years, but FUD knows no limitations. As the wise old saying goes "a sucker is born.." Elon is as capable of FUD as the used car salesman in my neighboring Chevy dealer. In fact I had this nagging thought and your statement about product manufacturers vs service providers crystallized it. It makes total sense. This is why WAYMO may never get into manufacturing cars. They would be happy to be a service provider, take a car, fit it with auto navigation and provide a service for which they get paid for. In addition they gain personal information (your commuting habits, your favorite restaurants) which they can monetize

Well, it's entirely possible that with fully self-driving cars, after the autonomous car delivers someone to their destination, the passenger(s) will send their car out of the area to park, to be summoned when needed. At the very least, the idea of parking within walking distance of the destination will become mostly a thing of the past. Parking should shift to where it's cheap or free, rather than where it's within walking distance.

So it's entirely possible that the demand for high-cost parking in downtown areas of the city will be rather reduced. My speculation is that this would lead to some high-rise or underground parking lots being closed and/or demolished. At the very least, the need for parking near where you're going will be rather diminished.

Some have pointed out that, in areas without nearby free parking, people might have their self-driving car keep driving around the block until they need it, thus actually increasing traffic congestion rather than relieving it. I hope that won't happen, but I can certainly see that it might unless steps were taken by cities to discourage that activity, which would waste energy in addition to increasing traffic congestion in downtown areas.

Your argument cuts both ways. In a dense urban area, you have to find parking nearby or send the car a long way to find cheap parking. Imagine you work in downtown and your car drops you off there. You do not want your car 45 minutes away, you want it close enough that your car get to you in about the same times as it takes for you to walk to the parking space. If more people start driving, as they can sit in the back and work in privacy instead of the crowded A-train, then parking will be an issue. Clearly autonomous driving will have societal impacts. Taxi services as we know will dramatically change, commuting will change.
At this stage, any predictions are a wild guess. And I believe that Elon knows that. But that does not prevent him from throwing out ideas, especially if it will help sell one car more.

 

[interestedinEV]

I was mulling this thread earlier today and it occurred to me:

• robo-taxis - will collapse the UBER market with a factor of five reduction in costs
• collapse of the UBER/taxi market means those expecting great profits will be disappointed
• it will make more sense to sell 'cars' instead of 'wishful' calls for a robo-taxi

I distinctly remember arriving in Huntsville via bus from Nashville at ~2 AM and finding there were no UBER drivers volunteering to take me home. Instead, I called on a Red Top cab and got home 30 minutes later.

If taxi companies decide to automate their fleet, I'm OK as long as they remain 24x7. But I've seen too many "$20" UBER fees to get from home to University Blvd to pickup my BMW i3-REx. The same d*mn price as a 24x7 taxi.

H*ll NO! I want my cars to serve my needs and requirements and no dependency upon the 'good will' of taxi or UBER 'services.'

Bob Wilson

Bob: Welcome to real world. As long as it a duopoly (Lyft vs Uber), the idea would be to drive out the taxi cab companies and raise prices sooner rather than later. The companies need to justify their high valuations. Only thing that will keep prices low (even if costs are low) is competition. So if we have Wyamo/Lyft, Tesla, Uber, a GM spin off etc., then may be prices will come down in reflection to costs.

 

[interestedinEV]

I don't see this as happening, despite Elon claiming that Tesla will get into the business of running a very large fleet of robotaxis. Making and selling automobiles is a heavy manufacturing business, and running a taxi fleet -- robotaxis or not -- is a service industry. I don't see the two merging, any more than cell phone providers actually make their own phones. (So far as I know, even AT&T doesn't actually make its own phones.) And Apple isn't getting into the business of offering cellphone service, either.

I'm sure that people can point to service businesses which sell products with their brand name on it, but -- and I could be wrong here -- I suspect every one of those will be light industry products (Amway would be one example), made without the need for the very high capital investments of mass producing automobiles. More often, it's just going to be products licensed by the service business to put the latter's label on a product made by some manufacturing company.

* * * * *

@interestedinEV : Thanks for the discussion! I'm really enjoying this, and I wish there were more in-depth, productive discussions/ debates like this one.

​

@Pushmi-Pullyu I enjoy the discussion too and thank you for kind comments.

As I was thinking about it, an example of manufacturer/service provider did come to my mind. For a long time Hertz was owned by Ford, Avis by GM and Chrysler had one. So this is not unknown. However Ford and GM sold off these subsidiaries as management attention was pulled in different ways and they did not the attention from top management. So I agree that is not a recipe for success, but there is some precedence for that.

 

[Pushmi-Pullyu]

I disagree with you here. Elon was engaging in hyperbole or exaggeration, knowing that risks were enormous. <snippage of good stuff> As much as he is a visionary, he is also a push the envelope and if it crosses the line, too bad type of person.

Well, I admit I don't see that we actually disagree here. Earlier, I said:

It's unclear to me if Elon is just shoveling out the hype in a manner which, unfortunately, investors have come to expect -- if entrepreneurs are not hyping their business with castles-in-the-sky rhetoric, then they must not believe the business can succeed! -- or if this is one of Elon's pie-in-the-sky pipedreams...​

Seems like we are on the same page here.

In a dense urban area, you have to find parking nearby or send the car a long way to find cheap parking. Imagine you work in downtown and your car drops you off there. You do not want your car 45 minutes away...

Maybe things are different where you live, but here in Kansas City, cheap -- or more accurately, free -- parking would be a heck of a lot less than 45 minutes away from downtown. A 10-minute drive would easily let you find plenty of free parking places. Now, I realize that Kansas City isn't even among the biggest 25 cities in the U.S., so likely there are places where it would take a lot longer to find free parking. But 45 minutes seems to be an exaggeration.

Now, if everybody and his brother is sending his car to hunt for free parking on the fringes of a downtown area, then those free parking places are going to be filled up rather fast. So what I see happening is a shift away from downtown high-rise/ underground parking to a lot of large, lower-cost street-level parking lots and/or 2-level parking lots on the fringes of the downtown area. While demand for the former shrinks, demand for the latter will rise.

And anyway, it depends on whether or not you really need your car at a minute's notice, when you're at work. For most people with regular work hours, they could just schedule their car to pick them up at the door at a specific time every day, a few minutes after their work shift ends. The only time there should be an inconvenience about having your car parked 10-20 minutes away is if you have an emergency and need to suddenly leave work early. And that shouldn't be much of an inconvenience, because if you're in a dense urban area, then in an emergency you should be able to rather quickly summon a robotaxi from a taxi service to your location, using a smartphone app. You can then send instructions to your car to pick you up wherever you're going, or designate a halfway point to meet up and switch cars.

Of course, there are people who don't have such fixed hours, or need to be ready to travel to meetings elsewhere -- or to troubleshoot -- on a moment's notice. People who will need, and will be willing to pay for, their cars to remain close by their work, even if working in a downtown skyscraper. So that's why I didn't claim that the need for high-rise or underground parking in dense urban areas would disappear; I merely claimed that the demand would be reduced.

At this stage, any predictions are a wild guess.

That's true, and I realize I'm making rather broad predictions far in advance of the actual event, based on nothing but armchair reasoning. Who knows? Perhaps autonomous cars may change our culture and our urban landscapes far more than I realize. I may wind up being just as wrong as Lord Kelvin, who infamously said in 1895: "I can state flatly that heavier than air flying machines are impossible."