Musk Can’t Dodge Tesla Cash Woes Any Longer

It's not real, it's not going to happen, and setting up even a human rideshare service is going to take longer than 12 months

It seems to be completely pie in the sky type of thinking.

The only rational -non delusional- reason I see for the talk is if Musk does it to get better financing terms before the self driving hype dries down.

I think taxi services without driver are coming but the the secret sauce is remote human operator working together with high level of automation. Driver is the main cost of taxi service. If you get one operator to remotely oversee 20 highly autonomous vehicles and provide input when needed, the cost of taxi-service drops into a fraction of what it used to be and service is better than fully autonomous driving.

I think he's extremely optimistic and confident. He's been extremely successful so far, he's a billionaire, has done many things that nay sayers would have called impossible (ie: paypal, landing rockets, building electric cars with very competitive performance). It's not hard to see why Musk might believe he can do anything. He's taken big risks and gotten a lot of positive reinforcement over the last two decades.

I agree that his timeline for robotaxis is probably over optimistic, and that there are many unsolved problems. Self-driving isn't all they have to solve. They also have to solve complex and annoying problems such as having self-driving cars find the people they are supposed to pick up, and also having the cars somehow find charging, find parking, etc. Furthermore, Tesla's claim of 1 million robotaxis assumes that everyone who owns a Tesla with full self driving would want to rent them out as part of the Tesla Network. That's very unrealistic. Most people probably prefer having their car be always available and not subjecting it to potential damage/towing/fines (more driving, more risk).

Still, I wouldn't say Musk is ignorant about the state of self driving. They have self driving cars which they have demoed to people on their investor day. He just makes this probably incorrect assumption that it's all "just software" from here, and everything should be easy to fix. Software isn't easier than hardware. It could also be the case that changes do need to be made for the hardware in order to get high enough reliability, there is no guarantee that the hardware is completely right in its current iteration.

Tesla has gone ~15x since IPO. Unlike virtually every other tech-related IPO, it was possible for retail investors to invest in a risky, growth-oriented company. They IPO'ed at a 2.2B cap, meanwhile all major tech-related IPOs seem to be about 10B.

If you're a retail investor looking for high risk/high reward stocks, Tesla was a rare exception. In most other cases, only large funds have access to growth companies like that. I'd like to see more IPOs like Tesla's, rather than reserving wealth growth only for those with tons of money.

In short, if you're not interested in taking advantage of an option, don't assume other people think the same way.

Also, the robotaxi is not some zany idea Musk randomly came up. It's been publicly on their website for 3 years now and in their internal road maps for long before that: https://www.tesla.com/en_CA/blog/master-plan-part-deux

It's really bizarre to see the constant condemnation of Musk, because he chooses to have an ambitions long-term plan and follow through with it.

Is Tesla really ready for a long protracted war against Uber, Waymo (aka Google), and other autonomous taxi companies?

Tesla just spent (probably) ~$100 Million or so developing a 14nm chip, already obsolete (NVidia has a 12nm chip already, Intel/MobilEye has 7nm incoming 2020, and who knows what Google/Waymo got up their sleeves. Those TPUs are fully proprietary and fully to Google/Waymo's advantage). 7nm is deployed and shipping, Tesla's already behind.

And now you're telling me that to "raise money", they're entering another highly competitive field full of companies who are literally willing to lose money over the next 5-years on this idea?

That's straight up madness. I'm sure autonomous taxis will eventually become a reality, but no company is going to make money in that field for 5 to 10 years. The other companies like Google / Waymo are going to do what Silicon Valley does best: loss lead for years and years to build a customer base, before raising prices and eventually making a sustainable business.

Tesla has already spent all of its cash and loans on Gigafactory 1, Gigafactory 2, and Gigafactory 3. Scratch that, Gigafactory 3 isn't even complete yet (and is estimated to be a few billion dollars alone in costs...).

At best, Tesla will have to enter the autonomous taxi industry offering goods at cost (or higher: trying to make a profit). That's innately going to put them severely behind Google / Waymo, who will loss lead their way to cheaper prices and more customers.