Uber CEO Dara Khosrowshahi explains how Tesla is underestimating the complexity of running a customer fleet-based robotaxi ride-hailing service.
For years now, Tesla CEO Elon Musk has talked about the automaker solving self-driving and enabling its fleet of millions of customer vehicles to be onboarded on a Tesla-run robotaxi ride-hailing service.
He described Tesla owners driving to work and then sending their cars off to give autonomous rides to people while they are at work.
Earlier this year, Tesla released a teaser of its autonomous ride-hailing app.
Now, Dara Khosrowshahi, CEO of ride-hailing leader Uber, commented on Tesla’s potential entry in his market on the Logan Bartlett Show podcast (via Fortune) and highlighted some problems with Tesla’s approach:
“Probably the times at which you’re going to want your Tesla are probably going to be the same times that ridership is going to be at a peak. There are these peaks and valleys in terms of supply and demand.”
The CEO also questioned whether the average Tesla owner is going to want to let their vehicle being used by strangers on the network:
“It’s also not clear to me that the average Tesla owner or owner of any other car, is going to want to have that car be ridden in by a complete stranger.”
Finally, Khosrowshahi also added that it’s not so easy to build the entire customer service infrastructure for both the drivers and riders, or vehicle owners and riders in Tesla’s case:
“We’ve had to learn to build out a system that’s able to make everything work for both the rider and the driver. It’s taken us 15 years. It’s taken us tens of billions of dollars of capital.”
Despite all that, Khosrowshahi admits that self-driving is the future and he could see Uber partnering with Tesla one day.
Electrek’s Take
I think he got a point. Uber’s value lies in its ability to adjust prices based on demand and supply.
With Tesla’s customer-based fleet, the supply will be super high when demand is low and vice-versa. It removes a lot of the value.
However, that’s bad news for Tesla owners counting on that revenue, but not necessarily for the company. Tesla also talked about having its own company-owned fleet, which would reap the benefits when demand is there, but Tesla owners don’t want their vehicles added to the fleet.
As for his point about the complexity of Uber’s service, he is right. Although, Tesla benefits from learning from what Uber, Lyft, and others have already built.
But obviously, the self-driving problem is a bigger one to solve and would create more value than ride-hailing. The combination of both is just the ultimate value in transportation, especially when combined with electric vehicles.
I think the main thing Tesla is overlooking with this promise to owners about making money off of a ride-hailing fleet is insurance.
Insurance for ride-hailing commercial applications is more expensive, and then, you have to add the autonomous driving aspect into the mix.
Tesla is working on its own insurance product, which is available in some states, but it has yet to drive significant cost improvements for many drivers, and they haven’t even delved into the ride-hailing and self-driving world yet.
I honestly don’t know how much Tesla has looked into these issues. They are focused on solving self-driving first and that has also yet to happen. In short, there are a lot of unknowns yet.