Tesla Robotaxi Plan: How It Would Work

By Dan Anderson • Apr 25, 2019

Earlier this week, Tesla Motors CEO Elon Musk proposed a creative new idea for monetizing its electric vehicle products: robotaxis. Musk started conceptualizing this idea about three years ago and it took a while for Tesla’s technology to catch up to the plan.

The way it would work is that self-driving Tesla vehicles would be deployed and operate as a ride-hailing service that would compete against the likes of Uber and Lyft. So along with selling electric vehicles and solar panels, Tesla would also receive about 25% to 30% of the fares generated from vehicle owners who share their cars for the ride-hailing service — which would be operated entirely through AI-based self-driving technology. This income would help offset the cost of the cars.

Tesla owners would be able to use an app to offer their vehicles as a robotaxi while it is not being used. And this app would likely allow them to track the location of their vehicles.

Musk estimated that Uber and Lyft usually costs $2 to $3 per mile with human drivers. And he explained that the robotaxis would cost less than 18 cents per mile. Based on these numbers, Musk believes that Tesla owners could make $30,000 per year in profit depending on how much a vehicle is loaned out in a network.

Critics are saying that self-driving technology is too risky. And without human control, critics have been saying that self-driving Teslas could cause severe accidents. And critics pointed out that Tesla would still have to account for regulatory red tape for this type of program.

Another reason why critics are pointing out that there are major risks is due to Tesla vehicles having fewer sensors. Tesla’s autonomous vehicles have fewer sensors and it relies more on cameras. Most other companies add LIDAR — which is a light beam sensor that is able to handle 360-degree viewing in the dark.

Plus critics are accusing Musk of announcing these plans as a way to distract from the rough earnings call earlier this week. For the quarter ended March 31, Tesla Motors saw a net loss of $668 million on total revenues of $4.5 billion — which was one of the worst quarters the company has seen in its history.

Tesla also burned through $1.5 billion in cash and cash equivalents in the first quarter as it had to pay off $920 million in convertible bonds on March 1 and due to an increase in the number of vehicles in transit to customers. And since the company launched about 15 years ago, Tesla lost nearly $6 billion.

“A cynic would say (Musk) is doing this to justify Tesla’s stock valuation and nothing else,” said Gartner analyst Mike Ramsey via Autoblog. “But that is part of the Tesla ethos. You have to believe in the story of tomorrow to justify the train wreck of today, which is usually its financial situation.”