Elon Musk's One Million Robo-Cabs

The Tesla founder promises fully autonomous cars by the end of the year.

Fully autonomous vehicles will, almost certainly, disrupt car ownership in a fundamental way. We may give up the idea of private cars, altogether, or maybe we'll share them, or possibly make some money out of them when we are not actually using them.

The cost of running an electric vehicle will be much less than one with a conventional internal combustion engine. This is not only because the cost of energy is less but also, electric vehicles are much simpler,  will have much longer operational lives and will require less maintenance.

If you then remove the driver, taxis and ride-hailing services, such as Uber, will become much cheaper.

All this was detailed in a report by the think tank, RethinkX, in 2017.

But Musk has a different take. The RethinkX report considered that car ownership would plummet because using autonomous taxis would be cheaper the cost of running a private car.

Musk is floating the idea that Tesla owners would rent out their self-driving cars when not in use. 

There are many consequences to this idea.

A Tesla as an investment

How much money you can make depends on how much you use your car, but most cars spend most of the time either parked in the street or in a garage. So, if you can make $0.65 per mile, as Musk suggests, you could let your car do it's own thing while you sleep, or while you are at work.

The way it would work is that you would register your car as part of the Tesla network which would work somewhat like Uber. Except of course that, since the car is self-driving, you don't need to be around when it takes a call. The car would drive itself to where the passenger is waiting, drive her to her destination and then wait for the next job.

Tesla reckons that you could be earning $30,000 per year, which is the bulk of the price of a Tesla Model 3. (This assumes 90,000 miles per year, which means that, at an assumed average of 16 miles per hour, you'd need to hire the car out for about 16 hours per day.)

Given that the company suggests a total life of 11 years, that's not a bad return on your investment.

Fewer cars altogether

Another consequence of this model of ownership is that your car is now being used, maybe, 8 times more than if you only drove it yourself. In other words, it is doing the work of 8 cars. That means that the community, as a whole, will need 8 times fewer cars!

That's a lot of cars that are no longer being built, which is not perhaps a big deal for Tesla because it is now making money from the hire charges, as well as selling the cars. However, if this model works, other manufacturers will have to jump on the bandwagon, or their business will be decimated.

Whatever the result, there will still be far fewer cars and thus far fewer jobs in manufacturing. 

Impact on Uber, Lyft, et al

Clearly, this could have a major impact on ride-hailing companies and, of course, their drivers. Of course, they will have to adopt autonomous cars, in order to compete at all. And if other manufacturers go the same way as Tesla, competition will be fierce.

We may find that the likes of Uber and Lyft will need to form closer relationships with automobile manufacturers, perhaps becoming their ride-sharing arm, in order to remain profitable. Or maybe, ride-sharing companies will make deals with smaller, or foreign, car manufacturers who are unable, or unwilling to start up their own taxi businesses.

Optimistic?

Tesla say that their cars are already shipping with the hardware required for full autonomy and Musk is confident that the software required will be ready by the end of 2019. This means that, with a software update, a lot of Tesla cars could suddenly become fully autonomous very soon.

Technical capability is not the only hurdle to get over, though. As Musk admits, not all jurisdictions will allow the use of fully autonomous vehicles, and there are other issues to be solved such as insurance and liability for damage or injury.

But a million by the end of 2020?

Elon Musk is not known for the pessimism of his predictions but even if this one turns out to be an exaggeration, the vision is a still quite a stunning one.


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