Tesla’s Robotaxi Network is sitting on a trillion-dollar opportunity, based on ARK Invest’s report. These findings were related by analyst Tasha Keeney, who recently explained the potential of autonomous ridehailing fleets to the transportation industry in the future.
ARK’s Big Ideas 2020 report estimated that autonomous taxis would cost consumers only $0.25 per mile to use. In comparison, personally-owned vehicles have maintained the same costs to own and operate since Ford’s Model T at $0.70.
1/ Here's why we think Tesla and every other automaker should pursue autonomous driving - the market likely will be worth much more than the auto market today. We estimate autonomous ridehailing will be worth $9T, or more than today's energy sector, in the next ten years. https://t.co/emo2JclHaJ pic.twitter.com/ZOnVxFqd5D— Tasha Keeney (@TashaARK) February 11, 2020
ARK hypothesized that autonomous taxis would be the primary source of transportation in the coming years since autonomous ridehailing services could cost consumers less by 2024 when compared to owning a vehicle.
It should be noted that ARK’s estimates don’t seem to include the difference in costs between an autonomous ICE car and an autonomous EV. Electric vehicles, like Tesla, usually have low maintenance costs and are much cheaper to own in the long run when compared to ICE cars.
Elon Musk's Stance on Autonomy
ARK noted that autonomous ridehailing platforms with the potential to dominate the industry had a 10-year net present value (NPV) of more than $1 trillion in cashflow today, which could hit up to $5 trillion by 2024 and $9 trillion by 2029. Based on its report, ARK theorized that the platform fees of current ridehailing companies would be reduced from 20%-30% to 1%-5%.
“The majority of fees will go to ridehailing platform providers that own and develop autonomous technology,” said ARK’s report. As such, Tesla’s autonomous technology will give its Robotaxi Network an advantage.
During Tesla’s Autonomy Day in April 2019, Elon Musk revealed that Tesla’s entire expense structure was "basically" autonomy. Musk's statement was a response to a question asking how much Tesla was spending on FSD development. In an interview on the Third Row Podcast, Musk reiterated his stance on autonomy and how important it was for Tesla.
“In order for a car company to be successful, it has to succeed on two fundamental technology discontinuities. One being electrification, the other being autonomy. Even pure electrification by itself is not enough,” Musk said with confidence.
Musk’s thoughts on the future of the auto industry seem consistent with ARK’s hypothesis that consumers will eventually prefer ridehailing services over owning their vehicles. If ARK’s prediction proves to be accurate, then Tesla has positioned itself ideally.
Tesla's Robotaxi Fleet
Tesla’s Robotaxi fleet has the tech and data to become a top autonomous ridehailing platform. Its HW3 chip has already collected a large number of real-world data through its Neural Network. ARK Invest CEO Cathie Wood explained how much of a lead Tesla has in autonomy.
“Our analyst, James Wang, who worked an Nvidia—the artificial intelligence company—for eight years, looked at the specs and said…[Tesla is] four years ahead of any other auto manufacturer in terms of the specs out there on chip technology. And that’s important because we’re going autonomous with electric,” said Wood.
Tesla’s Run Has Only Just Begun, Says Ark Investment CEO 🚘🤖📶 “The winner will have the most data & highest quality data. #Tesla has 14 billion miles of real world driving data today & the closest competitor Waymo has 20 million.” https://t.co/Faj9NotP9Z $TSLA #EV pic.twitter.com/hacCS0QiDX— Tesla New York (@TeslaNY) January 31, 2020
Thus far, ARK’s CEO shared that Tesla has collected over 14 billion miles of real-world data. She also illustrated that Tesla’s closest competitor in the autonomous ridehailing market, Waymo, had only collected 20 million miles of simulated data. Wood noted that the winner of autonomous vehicles would have the most data and the best quality of data, which Tesla does.
Ultimately, Tesla’s Robotaxi Network has a real shot at taking a big piece of the $9 trillion autonomous ridehailing pie. Coincidentally, Tesla’s road to a trillion-dollar valuation was mapped out by ARK in a recent report, and autonomy was the most significant factor.
ARK presented ten scenarios that could happen to Tesla by 2024, and different price targets for each one. Without autonomy, ARK calculated that the highest price target for Tesla was $3,400. With autonomy, ARK’s highest price target for Tesla was $22,000, which speaks volumes about how much the company’s Robotaxi fleet could contribute to its valuation in the future.
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