5 ms·

I think Tesla also understands that once autonomous cars are ubiquitous, you won't own one: you'll just rent one for whatever needs you have in that moment. I t

I think Tesla also understands that once autonomous cars are ubiquitous, you won't own one: you'll just rent one for whatever needs you have in that moment. I think the best analog for the market dynamics that this will create is the airline industry -- a fleet of vehicles will be a massive investment, and ongoing maintenance, government oversight, etc. will be similarly cumbersome. But the job of the airline (actually operating the plane) is being done by the company creating the algorithms. That's a market control point that can be leveraged. That's why ultimately, I feel Uber will end up being the Expedia/Priceline of the self-driving car industry. If you don't control the means of value production, you become a middleman. There's a reason they were working on their own self-driving tech rather than licensing from someone else -- everyone who is actually building this tech likely told them "go shove it, we can recreate what you do far easier than you can recreate what we do".

olivermarks 9y ago
I suspect Tesla will be the next major story of burn rate fueled firms confronting reality...
- nojvek 9y ago
  That's what many said about Facebook when they had their crazy valuation. The same was said of Google before they figured out ads. Tesla has a brand value higher than any other car. It's not an app that can be easily replicated. The dynamics are not the same as Uber.
- exelius 9y ago
  Tesla is a different story entirely. Uber is burning cash by subsidizing operations (aka buying customers); Tesla is spending it on capital assets and R&D. Money spent on operations generally won't benefit you beyond the current quarter; but capital assets (including intellectual property as the result of R&D) retain value over time and often pay for themselves in a relatively short period of time. You'll notice a common thread throughout Elon Musk's "big bets" (Tesla, SpaceX, etc.) He is extremely conservative with operational spending, and all of these companies are very capital-intensive. Just look at the difference between a "Tesla Store" (small, maybe 3 or 4 employees, cars can be stored offsite wherever is cheap) and a normal auto dealership (huge, dozens of employees, majority of expensive real estate is used for parking cars). The Tesla store is very efficient compared to the auto dealer. When you have high capex, it makes it easier to fund your company through debt rather than equity since those loans/bonds are backed by capital assets with a non-zero liquidation value.
scottLobster 9y ago
I keep hearing this, but why wouldn't you own one? Part of the reason to own a car is the immediacy of use. I don't want to have to do the equivalent of waiting for a lyft/uber every time I want to run to the grocery store. Sure in large walkable cities with constantly circulating fleets car ownership might go away. For those of us in the suburbs who HAVE to drive everywhere, not so much. Even waiting 5 extra minutes for every errand (optimistic, given that my most recent lyft took 10-15 minutes to arrive) adds up fast. Let alone going out into the rural areas where Uber/Lyft scarcely exist and the nearest human structure can be miles away. I could, however easily see a model where people rent their self-driving car out to Uber/Lyft when they're not using it. Driver fees would be gone, and they could take a greater cut that might even put them towards profitability.
- erikpukinskis 9y ago
  1) Cost 2) Configurability Anyone who is price sensitive won't want to pay the hourly rate to have a car sit in their garage all day/night doing nothing. Nor will they want to pay the up front cost and/or interest to hold a controlling share in the vehicle. And configurability means you can take a 2-seater when you are going to work, take a 4-seater to lunch with you coworkers, take a hatchback to the farmers market to pick up your groceries, and then an SUV to the mountains, preconfigured with a roof rack with your ski rentals already on it, sharpened and waxed, and then take a mobile office for the drive home so you can get some work done, and a mobile bedroom for your trip down to LA so you can catch up to sleep. But yes, the wealthy will still own private cars because they can have it waiting, just like private planes. Also, cooties.
  - scottLobster 9y ago
    Plane travel isn't a day-to-day event, even for those wealthy enough to afford private jets. You still have to pack, travel to an airport, get on the plane, crew has to be made ready, flight plan has to be filed, etc. It's a high-impact event that occurs at most every few days, even for frequent flyers. Driving is a day-to-day task. My time's already short, if I have to add an extra 5 minutes waiting for pickup every time I want to go anywhere (once again an optimistic estimate, it would likely be closer to 10), on a busy day that's a minimum extra hour a day of time I've lost just standing on the sidewalk. Margin matters, even an extra 15 minutes a day adds up to over 90 hours a year. Also these rental services/configurations will hardly be free. So the cost of the car/maintenance isn't eliminated entirely. For my situation, given that I've been driving the same car for the last 11 years, and it was ~16k when I bought it, plus maybe an average $1200 a year in insurance, and maybe an average of $300 a year in maintenance that means I've spent an average of $2,954.54/year over the last 11 years on car ownership. And that number is only going to get smaller unless I buy another car. But in this scenario I'm losing a minimum 90 hours per year on the margin. If those were work hours, then at my current take-home rate I can decrease that number down to around $1065/year going forward. Given that I'm likely going to make more money as the years go by, these continuous rental services are going to have to be awfully cheap to be worth it for my situation, and I don't think I'm too far from the average. Now sure, if you're buying a new car every 4 years like some people do then it might be worth it. Or if the cost of insurance is prohibitively high in your given location. Or if your job sucks and you just can't afford a car. Or if you actually need a broad variety of vehicles on a regular basis. There are lots of factors that go into it, but for anyone who's middle class or better I don't think it'll supplant ownership entirely. Or maybe it will and I'll just be with the sour-grapes number-crunchers in the corner ranting about margin to anyone who'll listen. :)
braveo 9y ago
I don't think so. I'd much rather pay the cost of ownership than rental every time I wanted to move about. By definition rental is going to be more expensive than ownership. I don't doubt that companies will have fleets of cars for their employees, etc, but personal vehicles are not going to go away.
- dfrey 9y ago
  Why should rental be more expensive by definition? A fleet of autonomous vehicles can operate 24/7. Your own personal car gets a trip to work and a trip back home every day and maybe another round trip to an activity or chore.
- molmalo 9y ago
  That depends on how much do you need to use a car. If you dont need it that frequently, renting is cheaper.
  - braveo 9y ago
    who in the world doesn't need a car that frequently? young people, old people, and homeless people. Everyone else needs a car frequently.
    - _Tev 9y ago
      Those who live in Europe. Or anywhere with decent infrastructure.
- gnaritas 9y ago
  That's short sighted and incorrect. Rental is only going to cost more than ownership if multiple people aren't sharing the cost, but the whole point of autonomous cars defeats that idea, renting will be vastly cheaper than buying. > but personal vehicles are not going to go away. For the vast majority of the population, yes, they will go away.
  - eip 9y ago
dixie_land 9y ago
Owning a car and the freedom to travel whenever wherever for whatever reason is a fundamental American value that won't go away.
- gnaritas 9y ago
  Sure it will, when cars are available on demand anytime you want one for however long you want it at the press of a button. Convenience changes values, and ownership sucks when that kind of convenience exists.

olivermarks 9y ago

I suspect Tesla will be the next major story of burn rate fueled firms confronting reality...

nojvek 9y ago
That's what many said about Facebook when they had their crazy valuation. The same was said of Google before they figured out ads. Tesla has a brand value higher than any other car. It's not an app that can be easily replicated. The dynamics are not the same as Uber.
exelius 9y ago
Tesla is a different story entirely. Uber is burning cash by subsidizing operations (aka buying customers); Tesla is spending it on capital assets and R&D. Money spent on operations generally won't benefit you beyond the current quarter; but capital assets (including intellectual property as the result of R&D) retain value over time and often pay for themselves in a relatively short period of time. You'll notice a common thread throughout Elon Musk's "big bets" (Tesla, SpaceX, etc.) He is extremely conservative with operational spending, and all of these companies are very capital-intensive. Just look at the difference between a "Tesla Store" (small, maybe 3 or 4 employees, cars can be stored offsite wherever is cheap) and a normal auto dealership (huge, dozens of employees, majority of expensive real estate is used for parking cars). The Tesla store is very efficient compared to the auto dealer. When you have high capex, it makes it easier to fund your company through debt rather than equity since those loans/bonds are backed by capital assets with a non-zero liquidation value.

scottLobster 9y ago

I keep hearing this, but why wouldn't you own one? Part of the reason to own a car is the immediacy of use. I don't want to have to do the equivalent of waiting for a lyft/uber every time I want to run to the grocery store. Sure in large walkable cities with constantly circulating fleets car ownership might go away. For those of us in the suburbs who HAVE to drive everywhere, not so much. Even waiting 5 extra minutes for every errand (optimistic, given that my most recent lyft took 10-15 minutes to arrive) adds up fast. Let alone going out into the rural areas where Uber/Lyft scarcely exist and the nearest human structure can be miles away. I could, however easily see a model where people rent their self-driving car out to Uber/Lyft when they're not using it. Driver fees would be gone, and they could take a greater cut that might even put them towards profitability.

erikpukinskis 9y ago
1) Cost 2) Configurability Anyone who is price sensitive won't want to pay the hourly rate to have a car sit in their garage all day/night doing nothing. Nor will they want to pay the up front cost and/or interest to hold a controlling share in the vehicle. And configurability means you can take a 2-seater when you are going to work, take a 4-seater to lunch with you coworkers, take a hatchback to the farmers market to pick up your groceries, and then an SUV to the mountains, preconfigured with a roof rack with your ski rentals already on it, sharpened and waxed, and then take a mobile office for the drive home so you can get some work done, and a mobile bedroom for your trip down to LA so you can catch up to sleep. But yes, the wealthy will still own private cars because they can have it waiting, just like private planes. Also, cooties.
- scottLobster 9y ago
  Plane travel isn't a day-to-day event, even for those wealthy enough to afford private jets. You still have to pack, travel to an airport, get on the plane, crew has to be made ready, flight plan has to be filed, etc. It's a high-impact event that occurs at most every few days, even for frequent flyers. Driving is a day-to-day task. My time's already short, if I have to add an extra 5 minutes waiting for pickup every time I want to go anywhere (once again an optimistic estimate, it would likely be closer to 10), on a busy day that's a minimum extra hour a day of time I've lost just standing on the sidewalk. Margin matters, even an extra 15 minutes a day adds up to over 90 hours a year. Also these rental services/configurations will hardly be free. So the cost of the car/maintenance isn't eliminated entirely. For my situation, given that I've been driving the same car for the last 11 years, and it was ~16k when I bought it, plus maybe an average $1200 a year in insurance, and maybe an average of $300 a year in maintenance that means I've spent an average of $2,954.54/year over the last 11 years on car ownership. And that number is only going to get smaller unless I buy another car. But in this scenario I'm losing a minimum 90 hours per year on the margin. If those were work hours, then at my current take-home rate I can decrease that number down to around $1065/year going forward. Given that I'm likely going to make more money as the years go by, these continuous rental services are going to have to be awfully cheap to be worth it for my situation, and I don't think I'm too far from the average. Now sure, if you're buying a new car every 4 years like some people do then it might be worth it. Or if the cost of insurance is prohibitively high in your given location. Or if your job sucks and you just can't afford a car. Or if you actually need a broad variety of vehicles on a regular basis. There are lots of factors that go into it, but for anyone who's middle class or better I don't think it'll supplant ownership entirely. Or maybe it will and I'll just be with the sour-grapes number-crunchers in the corner ranting about margin to anyone who'll listen. :)

braveo 9y ago

I don't think so. I'd much rather pay the cost of ownership than rental every time I wanted to move about. By definition rental is going to be more expensive than ownership. I don't doubt that companies will have fleets of cars for their employees, etc, but personal vehicles are not going to go away.

dfrey 9y ago
Why should rental be more expensive by definition? A fleet of autonomous vehicles can operate 24/7. Your own personal car gets a trip to work and a trip back home every day and maybe another round trip to an activity or chore.
molmalo 9y ago
That depends on how much do you need to use a car. If you dont need it that frequently, renting is cheaper.
- braveo 9y ago
  who in the world doesn't need a car that frequently? young people, old people, and homeless people. Everyone else needs a car frequently.
  - _Tev 9y ago
    Those who live in Europe. Or anywhere with decent infrastructure.
gnaritas 9y ago
That's short sighted and incorrect. Rental is only going to cost more than ownership if multiple people aren't sharing the cost, but the whole point of autonomous cars defeats that idea, renting will be vastly cheaper than buying. > but personal vehicles are not going to go away. For the vast majority of the population, yes, they will go away.
- eip 9y ago

dixie_land 9y ago

Owning a car and the freedom to travel whenever wherever for whatever reason is a fundamental American value that won't go away.

gnaritas 9y ago
Sure it will, when cars are available on demand anytime you want one for however long you want it at the press of a button. Convenience changes values, and ownership sucks when that kind of convenience exists.