At the opening of the Gigafactory and on yesterday’s earnings call, Elon Musk mocked Tesla
“There will be a custom robotics that will look completely futuristic.”
“We are also working on a new vehicle that I mentioned at the Giga Texas opening, which is a dedicated robotaxy. It will be greatly improved for autonomy – which means it won’t have a steering wheel or pedals. There are a number of other innovations around it which I think are very exciting, but It’s basically optimized for the lowest fully considered cost per mile or kilometer when everything is factored in.”
Previously, Tesla had made two statements about the robotaxi show. Initially, they said that once they achieved actual “full autonomous driving” (not to be confused with their current offering of that name), they would create a “Tesla Network” taxi service that would take advantage of Tesla-owned vehicles and customer cars. From customers wishing to allow their cars to be rented out when not in use. It’s been suggested that if you’re willing to rent your car, it will pay off big for you – Elon Musk said it would be crazy to buy any other car, because a Tesla would make money rather than cost.
non lease plan
They also described a plan that was one of their smartest. Tesla has indicated that it will simply take existing Tesla cars that are out of lease, and quickly convert them into the robotaxi fleet. The conversion would be simple on something like the Model 3 – just take out the pedals and the wheel and insert a nice plate where the wheel used to be, plus a few other minor changes. Due to the minimalist design of Tesla cars, this change will be simple and the result is rather elegant. Since Tesla believes all of its cars have the hardware to actually do self-driving, the change will be minimal.
The gigantic advantage there is that the rental customer has used about 40% of the car’s depreciation, and enjoyed it when it was new. Nobody cares if their taxi is 3 years old so it’s perfectly fine for this market. This means that they can operate a fleet of robot taxis at only 60% of the cost of a car compared to anyone trying to build a custom robotic taxi who has to buy new cars. The cost of the car is still the biggest cost component (especially with electric cars) so it’s a huge gain.
The genius was that it’s so hard for anyone else to do this. You can’t just turn random used cars into an auto hub easily to pull this off. Its easy only if you are the car maker and designed the car for this conversion. Additionally, if you find that your fleet is too large, you can return the units to used cars and sell them. This means that you can get bank financing for the purchase of your cars because banks are quite comfortable with traditional car financing.
Compare that to custom vehicles made by Zoox, Cruise, and Geely. While they gain many advantages by being custom – the whole reason Zoox exists are those advantages – they must build new vehicles at all these costs. Car buyers care a lot about getting a new car, but taxi passengers don’t care at all. This premium has been disposed of. In addition, vehicles intended for another function cannot be sold. This makes it more difficult to use debt financing to build the fleet, because if the business fails, the vehicles may be scrapped. A big burden for new robotics companies is to get capital to buy fleets of 10,000 robotakis to do service in a new city. Companies like Alphabet, GM, and Amazon
Of course, for Tesla, the big problem is that they don’t have fully autonomous driving yet, and despite ongoing “any day now” predictions from Elon Musk, they may not get it soon, or never, at least with existing hardware. So they may not be able to carry out this plan as written. On the other hand, they reserve the option to change sensors in a non-rental car, until (gasp) adding LIDAR.
You can modify other cars, but without removing the entire dashboard, they will not have the elegant look of a robotic taxi like Tesla. The design of all software controls from Tesla is well suited for this.
Tesla Custom Robot
Elon Musk now indicates that they might give up all of these advantages to build a custom robotics. They might do it for the same reason Zoox and Cruise want them to—things like face-to-face seating, large sliding doors, ease of access, four-wheel steering, easier cleaning and more. It might be another “Rubizium” design like the Cruise Origin and Zoox (a nearly symmetrical box with an almost trapezoidal shape). They may look like the vehicles that sparked “The Boring Company.” It’s hard to see that it’s worth the 40% cost savings.
Unlikely, but perhaps this is an admission that they can’t actually turn the old Teslas into a motorized hub, for fear that purely camera-dependent FSD won’t happen. But they do not like to admit this possibility.
A custom bot hub will definitely be a thing in the future. Once the world truly embraces robotic travel, people will start insisting on a car with no compromises with that vision. But that’s not what the world will insist on on day one. On day one, they’ll be happy to ride in a regular car like a Tesla Model 3 without wheels. They’d be a little annoyed by the difficulty of getting in and out of sedans, and the fact that you can’t sit face to face with people. In the end, a robot hub designed to do it better will triumph. In the end. In fact, while the lower height is essential for maximum aerodynamic efficiency, it is not difficult to design it so that the front seats can be reversed in the diversion for a face-to-face social taxi.
Low cost pod?
Elon Musk boasts low-cost running, less than the cost of a bus ticket. It is possible, although my own expectations for this included very low cost vehicles, especially two-person vehicles. It is possible that this is what is being talked about, a “pod” for two people. Such vehicles can be very cheap to make, even new – well under $10,000, and intended for urban use at low speed. A $10,000 electric car can be very cheap to run. In my article on the economics of robotaxi, I have included a spreadsheet indicating that a robotaxi service for a small vehicle can cost as little as 30 cents/mile. That would go 8 miles for less than the price of a subsidized bus ticket, and about 20 miles for the price of a non-subsidized ticket. (Disclosure: I am an investor/advisor at Nimbus, a company that builds early hand-wheeled vehicles of this type with a sales price target of less than $8,000.)
It is a little difficult, but not impossible, to compete with a bus in a car that seats only 4 people in the city. Few companies sell low-cost cars that are just for the city, because customers just love to buy cars they can drive everywhere – but they’re great for city dwellers and taxi services.
As usual, Tesla continues to surprise — its earnings certainly have been — and it is well positioned to do a good job in the field if it can build a fully functional autonomous driving system. Unfortunately, their current system is in a very unfortunate state compared to other companies, and major breakthroughs await. However, if they need to eat the crow and desire it, their huge resources give them the option of having a startup that manages to create a working pile to meet their needs, so they are a force that they fear. They have shown that they are good at making cars, and they will only get better. The robotaxi business requires both a self-driving program and an actual vehicle. Doing both offers some advantages.
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