Tesla’s ambitious foray into driverless ride-hailing could unlock a staggering $11 trillion market, according to Ark Investment Management. This prediction surpasses the combined market size of current ride-hailing giants like Uber and Lyft, suggesting Tesla’s potential to reshape the industry.
Ark Invest analysts highlight Tesla’s competitive edge, attributing it to the lower operating costs of electric vehicles compared to gas-powered cars. This cost advantage could allow Tesla to undercut rivals with more affordable prices. Furthermore, the firm expects Tesla’s robotaxis to operate at a lower cost per mile than traditional cars, potentially making ride-hailing more appealing than personal car ownership.
In their weekly newsletter, Ark Invest analysts state, “In our view, Tesla should enjoy a price umbrella at its robotaxi launch, thanks to the high level of current ride-hail prices… while leveraging a lower cost per mile than the average vehicle on the road.” They project that Tesla’s driverless rides could cost consumers a mere $0.30 to $0.40 per mile, significantly lower than the current ride-hailing average of around $2 per mile and personal car ownership costs of $0.70 per mile.
Tesla CEO Elon Musk, during the company’s third-quarter earnings call, revealed plans to launch a ride-hail service in Texas and California starting next year, subject to regulatory approval. While the initial rollout may involve vehicles with human drivers, Tesla eventually aims for a fully driverless experience. This gradual approach aligns with regulatory requirements in certain states that mandate driver assistance until specific milestones are met.
To solidify its commitment to autonomous ride-hailing, Tesla unveiled the Cybercab, a dedicated robotaxi without pedals or a steering wheel. This vehicle is expected to enter production before 2027 and will be priced below $30,000. Until then, Tesla’s ride-hailing fleet will consist of Model 3 and Model Y vehicles.
Despite the promising outlook, Tesla’s stock experienced a 2.5% decline on Monday, closing at $262.51. However, the company’s shares remain up 5.7% year-to-date. Uber’s stock saw a marginal increase of 0.1%, closing at $77.69, while Lyft gained 3.6% to close at $13.89.
While Tesla’s ambitious plans for driverless ride-hailing hold immense potential, navigating regulatory hurdles and achieving full autonomy remain key challenges for the company’s success in this rapidly evolving market.
