Featured Image Credit: @chaserobertsonn/Twitter and ARK Invest
ARK Invest thinks the ride-hailing service market is ready for Tesla’s Robotaxi fleet now. ARK analyst Tasha Keeney explained why Tesla should launch its ride-hailing service now and listed down the reasons the Tesla Network would succeed despite Uber and Lyft’s early lead.
Steve Mark Ryan from Solving the Money Problem analyzed Tasha Keeney’s interview with TD Ameritrade Network last week as she talked about the Tesla Network and its impact on the company. ARK Invest as a whole appears to support the idea of Tesla launching its ride-hailing service before achieving full autonomy with FSD by allowing drivers to operate the cars in its fleet.
During TSLA’s Q4 2019 Earnings Call, a retail shareholder asked if Tesla would release its ride-hailing network app before autonomy and Elon Musk seemed open to the idea.
“Well, I think it's -- probably will make sense to have like to enable car-sharing in advance of the kind of sort of drive Robotaxi fleet because the car-sharing can be done before Full Self-Driving is approved by regulators. So it's probably something that we would enable before sort of Robotaxi fleet is enabled,” he said.
With drivers behind the wheel, the Tesla Network would function more like a traditional ride-hailing service, but ARK thinks it would still benefit the company as a whole. ARK's bear thesis for TSLA revolves around the company failing to achieve autonomy. Keeney explained the upside of the Tesla Network launching with drivers behind the wheel.
"“…this ride-hailing network basically provides sort of—you know—a downside protection risk on that [bear] case. So [Tesla] still transforms their business into a software-as-a-service-like model. And we think it could be a great opportunity and Tesla should actually launch now," she said.
ARK Invest believes the time to launch the Tesla Network is now. According to Tasha Keeney, Tesla’s Robotaxi fleet could offer opportunities for drivers and potential customers that the world may need the most right now. Since COVID-19 has spread throughout the world, more people are looking for extra income and fewer people are riding public transportation to keep safe. A Robotaxi fleet would provide people with another mode of transportation and an extra stream of income.
The ARK Invest analyst explained that Tesla could compete with established ride-hailing service companies like Uber and Lyft because of the company’s lower cost structure. Tesla’s vertical integration, use of electric vehicles, and insurance program all make up its low cost structure.
Electric vehicles, specifically Teslas, have a lower cost of ownership than traditional ICE cars, clarified Ryan from Solving the Money Problem. Plus, electricity is usually cheaper—or significantly cheaper—than gas. Ryan speculated that there would probably be a spike in short- term demand for Tesla cars if the company were to launch its ride-hailing service.
“This is an important point. The money—the income— is going to be much better for somebody using a Tesla on the Tesla Network than using a different vehicle on another network…maybe this will even incentivize people to lease Tesla’s or get loans and use them to generate income as a source rather than people that have existing Teslas now,” he said.Follow @PurplePanda88