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I watched some commentary on CNN about Tesla's Q1 today. Popular opinion seems to be that doubling down on self driving will not "rescue" the stock because sel

I watched some commentary on CNN about Tesla's Q1 today. Popular opinion seems to be that doubling down on self driving will not "rescue" the stock because self driving cars are 5 to 10 years away. To me, that seems not that far away. At current interest rates of 5%, that means the robotaxi business would be devalued by 28% if it manifests in 5 years and by 63% if it manifests in 10 years. Given the size of the opportunity (2 billion cars on the road, so about 700 billion yearly manhours that can be automated), a devaluation of 28% or 63% seems to be not too much to make it unreasonable as an investment. One robotaxi would add something like $5k per year to the bottom line. So every million robotaxis would add $5B. Give that a p/e ratio of 30, and it increases Tesla's market cap by $150B. Can Tesla bring one million robotaxis to the market by 2029? Assuming the numbers above, that would increase their market cap by $150B. Or in today's dollars by $100B. Even if they never get beyond 1 million robotaxis. If one assumes that from 2029 on, they add one million of these every year, today's value of that future business probably exceeds all of the current Tesla market cap.

eqmvii 3y ago
counterpoint: robo taxis might be much, much further away than 5-10 years.
- dagw 3y ago
  And even if they're not (I believe they are), how long would Tesla get to keep that market to themselves?
  - ArtTimeInvestor 3y ago
    Optimally as long as google has managed to dominate the search business.
- nocoiner 3y ago
  Additional counterpoint: the current risk-free rate is probably not the right discount rate for the robo-taxi business.
- ArtTimeInvestor 3y ago
  Why would it? Tesla FSD is already being used for on a billion miles per year. Search for "Cumulative miles driven with FSD": https://digitalassets.tesla.com/tesla-contents/image/upload/IR/TSLA-Q1-2024-Update.pdf https://digitalassets.tesla.com/tesla-contents/image/upload/... Usage will continue to grow as it gets better. And it got a lot better over the last months. And then there is Waymo which proves that with geo-fencing, high resolution maps, additional sensors and remote operators on standby, robotaxis are already possible today. Tesla could add some of these too, if it wants to accelerate meeting regulatory requirements.
  - nolok 3y ago
    > Tesla FSD is already being used for on a billion miles per year. Search for "Cumulative miles driven with FSD" [...] Usage will continue to grow as it gets better. And it got a lot better over the last months. There is a big, hell a gigantic, difference between that and robotaxi. You need the car to be able to handle from start to finish, the entire trip, not parts of it, not even just 99% of it. Also, the car cannot stop or be unable to deal with some situation and require help. If owners randomly have to go help their car miles away because the "taxi" got into a unknown situation, they're quickly going to get out of that deal. And then you have all the regulatory and insurance issues. Is Tesla or the owner insuring the commercial part ? Are they required to get commercial license ? What happens if the car hit and kill someone during a robotaxi trip, who is responsable ?
    - ArtTimeInvestor 3y ago
      Waymo and Cruise already solved the issues you mention. Each issue Tesla can't solve in a more efficient way, they can solve by copying the competition.
      - nickthegreek 3y ago
        Waymo has employees watching their cars and resolving issues when they come up. So in order for Tesla to do robotaxis like that, you will now need to pay Tesla do to the monitoring and issue resolving as well. And then of course you will need your own special business insurance without the bulk purchasing power of Waymo/Cruise. When your car gets into an accident, you don't get to replace it with one from Tesla's fleet like Waymo does, you are just SOL.
fergie 3y ago
Robotaxis seem like a risky investment. Even if the tech gets nailed (and at the moment it struggles in urban environments), will legislators ever allow them? Most EU cities have legislation in place to curb traffic growth which robotaxis fly in the face of- its easy to see how "circling" instead of parking could create congestion. There seem to be too many problems related to liability. How do you replace all of the non-driving tasks of a taxi-driver? (cleaning, lifting bags, etc., helping with elderly/disabled people).
- ArtTimeInvestor 3y ago
  Risky investments are good investments. If you invest, that is your business. You get paid to carry risk. Legislators already allow robotaxis. Look at Waymo and Cruise.
  - fergie 3y ago
    Right, but SF actually seems to be back-pedalling on them. They seem to work better in Phoenix, but similar areas (car-centric urban sprawl) are a fairly limited market. Also- if I am wrong and robot taxis become super successful- would that affect sales of Teslas to private customers?
    - ArtTimeInvestor 3y ago
      Buying a car is going away just like buying CDs and DVDs went away. And running your own email server. Most people just want to get from A to B, not deal with the investment into and maintenance of a car.
- ben_w 3y ago
  > How do you replace all of the non-driving tasks of a taxi-driver? (cleaning, lifting bags, etc., helping with elderly/disabled people). This was my thought too when it was first discussed, but now he wants to use the same AI to power a humanoid robot, which (if it worked) would make this easy. My guess is that the performance of AI necessary for humanoid robots will not be available in a fully independent form-factor for at least 5-10 years after level 5 full self driving… but that belief is due to the electrical power envelope, so a humanoid robot whose sole purpose is these kinds of non-driving taxi related tasks, that I can believe may come sooner.

eqmvii 3y ago

counterpoint: robo taxis might be much, much further away than 5-10 years.

dagw 3y ago
And even if they're not (I believe they are), how long would Tesla get to keep that market to themselves?
- ArtTimeInvestor 3y ago
  Optimally as long as google has managed to dominate the search business.
nocoiner 3y ago
Additional counterpoint: the current risk-free rate is probably not the right discount rate for the robo-taxi business.
ArtTimeInvestor 3y ago
Why would it? Tesla FSD is already being used for on a billion miles per year. Search for "Cumulative miles driven with FSD": https://digitalassets.tesla.com/tesla-contents/image/upload/IR/TSLA-Q1-2024-Update.pdf https://digitalassets.tesla.com/tesla-contents/image/upload/... Usage will continue to grow as it gets better. And it got a lot better over the last months. And then there is Waymo which proves that with geo-fencing, high resolution maps, additional sensors and remote operators on standby, robotaxis are already possible today. Tesla could add some of these too, if it wants to accelerate meeting regulatory requirements.
- nolok 3y ago
  > Tesla FSD is already being used for on a billion miles per year. Search for "Cumulative miles driven with FSD" [...] Usage will continue to grow as it gets better. And it got a lot better over the last months. There is a big, hell a gigantic, difference between that and robotaxi. You need the car to be able to handle from start to finish, the entire trip, not parts of it, not even just 99% of it. Also, the car cannot stop or be unable to deal with some situation and require help. If owners randomly have to go help their car miles away because the "taxi" got into a unknown situation, they're quickly going to get out of that deal. And then you have all the regulatory and insurance issues. Is Tesla or the owner insuring the commercial part ? Are they required to get commercial license ? What happens if the car hit and kill someone during a robotaxi trip, who is responsable ?
  - ArtTimeInvestor 3y ago
    Waymo and Cruise already solved the issues you mention. Each issue Tesla can't solve in a more efficient way, they can solve by copying the competition.
    - nickthegreek 3y ago
      Waymo has employees watching their cars and resolving issues when they come up. So in order for Tesla to do robotaxis like that, you will now need to pay Tesla do to the monitoring and issue resolving as well. And then of course you will need your own special business insurance without the bulk purchasing power of Waymo/Cruise. When your car gets into an accident, you don't get to replace it with one from Tesla's fleet like Waymo does, you are just SOL.

fergie 3y ago

Robotaxis seem like a risky investment. Even if the tech gets nailed (and at the moment it struggles in urban environments), will legislators ever allow them? Most EU cities have legislation in place to curb traffic growth which robotaxis fly in the face of- its easy to see how "circling" instead of parking could create congestion. There seem to be too many problems related to liability. How do you replace all of the non-driving tasks of a taxi-driver? (cleaning, lifting bags, etc., helping with elderly/disabled people).

ArtTimeInvestor 3y ago
Risky investments are good investments. If you invest, that is your business. You get paid to carry risk. Legislators already allow robotaxis. Look at Waymo and Cruise.
- fergie 3y ago
  Right, but SF actually seems to be back-pedalling on them. They seem to work better in Phoenix, but similar areas (car-centric urban sprawl) are a fairly limited market. Also- if I am wrong and robot taxis become super successful- would that affect sales of Teslas to private customers?
  - ArtTimeInvestor 3y ago
    Buying a car is going away just like buying CDs and DVDs went away. And running your own email server. Most people just want to get from A to B, not deal with the investment into and maintenance of a car.
ben_w 3y ago
> How do you replace all of the non-driving tasks of a taxi-driver? (cleaning, lifting bags, etc., helping with elderly/disabled people). This was my thought too when it was first discussed, but now he wants to use the same AI to power a humanoid robot, which (if it worked) would make this easy. My guess is that the performance of AI necessary for humanoid robots will not be available in a fully independent form-factor for at least 5-10 years after level 5 full self driving… but that belief is due to the electrical power envelope, so a humanoid robot whose sole purpose is these kinds of non-driving taxi related tasks, that I can believe may come sooner.