Journalists Never Really Understood Musk Vision

Investment Analysis Clubs Macro Economic Trends and Risks
1

In a single call, Tesla announced it’s killing the Model S and Model X, has no plans for new mass-market models, and is pivoting entirely to “transportation as a service.”

Oh Boo Hoo.
Musk since 2016- Tesla first mentioned a future car sharing service for its cars with autonomous control capability in 2016.

Which is why model Y & 3 haven’t seriously been redesigned. They are an intermediate step to RoboTaxis provide ride-sharing service. If the RoboTaxis can operate profitably at .25-50 cents a mile; private vehicle ownership will take a serious hit. In fact such service may destroy auto manufacturers. Of course, except for luxury vehicle manufacturers, the rich & wealthy likely will continue to own vehicles.

And killing models S & X will open manufacturing facilities for the Optimus humanoid robot. And eventually models Y & 3 will be killed for those production factories to make RoboTaxis. Perhaps cheap Chinese EVs are not needed in the USA?

3 Likes
2

I hope you read it here before Mints shifts to the Tesla board.
More traffic on this board.

3

Baloney. There will be a marginal slice that will go without, but most people will want cars. Heck, in countries with surprisingly low incomes all around the world people want cars. Car ownership is second only to home ownership as a human want, once food and sex are secured.

In those countries there are cheaper alternatives already, yet people still buy a car as soon as they are able. Why is that?

This is, in my view, a serious misinterpretation of research (?) and a projection based on wishes rather than reality. (That is not unusual, look at New Coke, AOL/Time Warner, Blockbuster passing on Netflix, etc.)

According to ChatGPT:

Here is a list of car ownership per capita by country (vehicles per 1,000 people), based on recent data:

  1. New Zealand: 869
  2. United States: 860
  3. Poland: 761
  4. Italy: 756
  5. Australia: 737
  6. Canada: 707
  7. France: 704
  8. Czechia: 658
  9. Portugal: 640
  10. Norway: 635
  11. Austria: 632
  12. United Kingdom: 632
  13. Germany: 627
  14. Spain: 627
  15. Greece: 617
  16. Japan: 612
  17. Switzerland: 604
  18. Belgium: 590
  19. Netherlands: 588
  20. Finland: 577
  21. Sweden: 544
  22. Denmark: 540
  23. Ireland: 540
  24. Malaysia: 535
  25. Thailand: 277
  26. Indonesia: 78
  27. Vietnam: 50
  28. Philippines: 38
  29. India: 33

This list highlights significant regional variations, with high ownership in developed countries and lower rates in developing countries. Southeast Asia shows a wide range, with Malaysia leading the region in vehicle ownership

One thing we see is that as a country becomes more wealthy people want cars. With certain exceptions (ultra-dense urban, like Japan or NYC) the trend is undeniable. The lesser developed countries still have transportation, they just don’t have ownership.

As I always ( and preemptorially) say when writing this, there will be a market and a business here (taxicabs are already a business, as are rental cars) it just won’t change the basic fabric of life in the US - particularly since we are a mostly horizontally situated society, with vast suburbs and exburbs requiring lots and lots of travel.

(Does that mean Mommy might put Susie in a robocall to take her to soccer practice? Sure. Does that mean Mommy won’t have a car at all? Please.)

It’s still a long way off anyway. Truly.

10 Likes
4

It’s also worth pointing out that this conditional is exceedingly unlikely. As we’ve discussed time and again, there’s no particular reason to think that a TaaS car is going to be materially cheaper than the self-owned version of that same car. The overwhelming majority of the costs of a car are the costs of operating the car - those costs don’t get reduced if the car is driven 16 hours a day or one hour a day. You save money on paid parking and finance; you lose money with deadheading and having to monetize functions that owners usually do themselves (overnight storage, keeping the interior tidy, keeping track of objects left in the car, etc.).

Had Tesla been able to do what it thought it could do - convert the existing fleet to autonomy - it might have briefly had a serious cost advantage. There would be millions of cars that were already owned, partially depreciated, privately stored in people’s homes, and financed that could have their marginal unused capacity put into service. But if they’re building their own bespoke new taxis, that falls by the wayside.

5 Likes
5

From an operational POV that’s lost income, but I’d argue it’s a bigger issue on the consumer side.

One of the main reasons people hate buses is because you have to wait. It’s a real inconvenience, and people only do it when economics don’t allow the ownership of a private vehicle. (Certain exceptions aside: repairs, revoked license, etc.)

In a horizontal society the deadheading is going to require one of two things: lots and lots of cars sitting conveniently nearby (not earning money) or longer wait times for your car to arrive. Yes, Uber and Lyft et al have a nice business here, particularly in urban settings where ownership is already low, or situations where it makes sense (Friday night bars & driving home), but each of those wait times is a disincentive not to have your own car (not to mention having a baby seat for the kid, adequate trunk space for your Costco purchases, or just the thrill of “your” personal choice vehicle.)

Deadheading won’t be the downfall of Robotaxi for sure, but it’s one of the issues that can be overcome either with tons of capital deployment or lots of consumer irritation.

1 Like
6

Oh, I certainly agree that there’s consumer-facing issues with deadheading as well. But even at a much simpler level, deadheading just unavoidably increases the cost of operation.

Taxis and rideshares unavoidably have some of their miles running empty. They drop off a passenger at one location, and their next passenger is at another location, and so the car has X amount of miles where it is running and isn’t providing transportation to anyone. Privately owned cars don’t have this, for the most part - the car sits and waits for the driver.

This is not trivial. Estimates vary. But the figures I’ve seen for taxi/Uber are around 25-40% of miles being lost to deadheading. That’s a pretty big expense apart from the inconvenience to consumers or the extra capital cost for surplus vehicles to cut down on wait times. The car simply has to be driven more to provide the same number of transportation miles, which drives up the per mile cost.

5 Likes
7

I don’t think we are reading that the same way. He has LONG been about turning his existing consumer purchased cars into “robotaxis.” In fact, it was one of his more outlandish predictions that a Tesla car would appreciate in value because of the future utility.

Now, you seem to be suggesting that it has always been about creating an Uber/Lyft like company and not about personal ownership. I think such a claim is specious at best.

5 Likes
8

The difference is that Tesla dove into a market for which there was already substantial demand (automobiles), it was just a different way to make them. (I am definitely not understating the difficulty of doing so, nor the tremendous achievement of having done so, and so wildly successfully, just that “cars” were a well established need; heck, we designed our entire post WWII infrastructure around them.

This is not true of “humanoid robots”, for which there may be a terrific uptake - or there may not. Or there may be, but not for a while, or not in this form. All of those things are risks which are very different than “4 wheel transportation, this time propelled by electricity.”

If the Optimus vision doesn’t come true, then we have pretty much watched an American colossus be built and then dismantled in real time across a space of only a couple decades.

I won’t deny that Musk has had some great vision: Tesla and SpaceX and probably Starlink. I’ll also note that he’s had some terrible ones: Boring Company, living on Mars, acquiring Twitter, hyper loop, and of course, DOGE.

3 Likes
9

Perhaps.
Musk is a big picture guy. But is he a dreamer or a visionary?
If the transportation as a service concept fails. He’s an unrealistic dreamer. If the concept succeeds; he ranks up with Edison.
Musk other big ideas:
underground boring
hyperloop technology not an Musk original idea but hyperloop competition was sponsored by Space X. India has built a prototype.
reusable rockets
robots
colonize Mars

10

I think it’s far more likely that neither of these things happens. That TaaS becomes something that is a viable economic product but isn’t especially revolutionary.

Like Uber rideshares themselves. At one point early on, some folks in the transportation planning biz were thinking that Uber was going to change everything - that we’d see downtowns and other dense urban areas start to rid themselves of cars and parking spaces as urban residents shed their addiction to cars. I went to more than one panel of traffic engineers and architects trying to envision what the changes from this mostly car-free central business district would look like.

And that didn’t really happen. A lot of “rideshare” usage just ended up displacing taxi rides. Not all of it - there’s definitely more folks that are catching a ride today (Uber and Lyft and taxis) than did before (just taxis). But not enough of a delta to really change transportation patterns.

We don’t know yet how AV TaaS will shake out, but there’s a decent chance it will end up being the same thing. It might just be modestly cheaper than Uber/Lyft/taxi are today. Which would let companies displace Uber and Lyft and taxi services (unless those companies join in), but wouldn’t rank up there with Edison.

3 Likes
11

No, not perhaps.

Even if he is successful in this NEW endeavor, the claim that he has ALWAYS been about this remains specious.

https://www.businessinsider.com/elon-musk-claim-that-tesla-cars-will-appreciate-in-value-likely-wrong-experts-2019-4#:~:text=“If%20you%20buy%20a%20Tesla,will%20be%20ready%20next%20year.&text=Still%2C%20Musk’s%20claim%20that%20Tesla,go%20up%2C”%20Ibara%20said

“If you buy a Tesla today, I believe you are buying an appreciating asset, not a depreciating asset,” Musk said during an interview with MIT research scientist Lex Fridman.

Musk’s prediction is based on two assumptions: Tesla vehicles will be able to drive themselves without any human input by the end of 2019, and customers will be able to make money from their vehicles by including them in an autonomous ride-hailing service Musk says will be ready next year.

Bolding is mine.

4 Likes