Whatever you think of Tesla, and/or Elon Musk, they have a habit of breaking the internet. So this week was no different, with the announcement of a $25k Tesla coming soon in 2025, that is dubbed "The Robotaxi". Let's explore that as a theme, and discuss the feasibility and the wider ramifications for society as a whole.
1.What is the "Robotaxi"?
The concept of the Robotaxi is a simple one. A driverless car that can be requested on demand (think Uber) and takes you from A to B. No fuss. Safe. Clean. Automated. With the cost of human capital soaring, the more we get robots doing things that humans only once did, the more profit corporations, government and individuals can make. Too capitalistic? You decide.
2. Why is this Concept Linked to Tesla?
That is simply due to the first mover advantage they have in the EV space. With the Model Y becoming the best selling car on the planet in 2023, coupled with their head start in FSD, this means they have a launch pad that no-one else has.
3. What Needs to Happen for This to Work?
There needs to be 3 things.
1 - a fully mature FSD that is not only capable of driving, but of communicating with the potential passenger for pick up / drop off. That is a LONG WAY off just yet.
2 - governance, and getting the concept past regulators, be that state, country, or automotive industry bodies. This is going to need to be controlled, and people will want their slice of the $$, and of course we must ensure safety is paramount.
3 - a cost effective EV. This is where Tesla can push home their advantage with the announcement of the $25k EV. It makes the business case work.
4. What are the FSD implications?
Aside from the obvious, being able to drive from A to B, safely. Then the real problem as I breifly mentioned above, is the pick up, which is where the friction in the process occurs. Being able to navigate to apartment 1A is one thing, but finding your client is not something a car can do. It will just sit there and you have to find IT. Not impossible at all, but not here yet. Then there is the drop off, how many times have you said to your taxi driver "over there please". How do you do that with a Robotaxi?
5. What are the Governance implications?
This is where it gets spicy. Who is going to be the first governmental department or region to allow it? Califronia? Probably. Other states and countries will lag behind, waiting to see the errors and problems and try to legislate for them. How long will it take for a Robotaxi in the narrow streets and villages of Rural Italy? Maybe decades. Once permission is given, you can be sure that the taxation question will rear it's head. If the Robotaxi does not "employ" anyone, then how can the State get it's tax revenue? That needs to be thought through and negotiated.
6. What about the overall ROI - why won't a premium $100k Robotaxi work?
Let's think about this and do some math. Let's say the Robotaxi costs $25k to buy. Add in a hefty commercial software licence for a mash up of FSD and Uber. Say another $20k per year. Add in depreciation, cost of re-charge, cost of repairs and new tyres, the undoubted human checking and cleaning it will need periodically, and already you are looking at $75k per annum to have one of these on the road. It can't work 24 hours a day. It needs to charge and rest, be cleaned, and have regular 'safety' checks. Let's say it works 16 hours a day in x2 8 hour shifts. 7 days a week thats almost 6,000 hours a year it is earning $. At a cost of $75k it will then need to produce $12.50 an hour to pay for itself. Now an hour's journey in a cab in SOME countries could be as high as $100. That's paying a wage to the human. So that price will come down. It should still be profitable at scale though, as my napkin math demonstrates.
SUMMARY - Will We See The Robotaxi Soon?
IMHO I think this is a decade away at least. Expect to see trials starting 2027/8 and then a host of regulatory arguments that slow it down. With the exception of China. Check out this article about Baidu who claim there are already there (ahead of Tesla).....
In "The Unravelling", which is set in the year 2038, we have reached critical mass on automated cars and the Robotaxi as a concept, however that also required improvements in other critical infrastructure. Think of a four-way stop sign. How do the cars communicate as to who's turn it is to "go"? In the UK we don't allow that and instead have lights everywhere. OK, great, so lets automate the lights and make them smart and have them talk to the cars.
That's all fine and well until something goes wrong............
FIND OUT what happens when things DO go wrong in "The Unravelling" - out now!
I'd love to hear your thoughts and comments and please do challenge me on my napkin math!
Speak soon!
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