The Tesla Network Could Provide Healthy Competition In The Ride-Sharing Industry

APR 20 2017 BY EVANNEX 6


Could Tesla be moving in on Uber’s turf? According to a recent article in Seeking Alpha*, “Back in July 2015, Uber CEO Travis Kalanick was attributed with saying he would buy 500,000 self driving Tesla’s in 2020. This set off a spark of media frenzy, and even prompted Morgan Stanley analyst Adam Jonas to bring up the report on Tesla’s subsequent Q2 2015 earnings call.” However, instead of joining forces with Uber, Tesla CEO Elon Musk pivoted in a different direction.

*This article comes to us courtesy of Evannex (which also makes aftermarket Tesla accessories). Authored by Matt Pressman.

Instead, “Elon Musk unveiled his Master Plan Part 2, laying the groundwork for his vision of what Tesla will become over the next decade… Musk’s answer to Jonas became much clearer. Selling 500,000 self-driving Tesla’s to Uber is enticing from a surface-level sales perspective, but omits the bigger picture. Offering the Tesla Network as a stand alone app will allow Tesla [to] offer transportation services to a whole new subset of customers that don’t have the capital to buy a car outright. Perhaps Elon’s biggest innovation surrounding the Tesla Network is that it will be a revenue opportunity for its customers.”

Tesla Model X launch event in Hong Kong in January!

How much additional revenue could this mean for Model 3 customers? Assuming the Model 3 evolves into a fully autonomous vehicle, “If a Model 3 owner rents out his car for an average of six hours per day while they are at work, that would result in 1,800 hours of driving annually (assuming 300 work days). Even with net revenue of just $5 per hour, that would result in $9,000 in income for a Model 3 owner in just one year. With a projected sticker price of $35,000, that’s more than 25% of the total cost of the car.” But here’s the catch: Tesla owners must use the Tesla Network in lieu of Uber (or other services like Lyft).

Tesla Model 3

Could this disrupt ridesharing as we (currently) know it? “There is some speculation that ride sharing services will be so efficient they will actually decrease the number of new vehicles sold annually. This means there will be even more competition for an ever fewer number of unit sales. Although this may be scary for companies like Volkswagen or GM whose businesses are built on selling cheap cars at very high volume, it could be a boon for companies like Tesla that lead in autonomous technologies.”

Above: Galileo Russell examines the potential of the Tesla Network (Youtube: HyperChange TV)

When looking at the valuation of Uber and Tesla, “Uber was [recently] valued at a whopping $68B. Tesla’s market capitalization at $277 per share (assuming 170M shares outstanding) is $50B. This is perhaps the most intriguing part of the Uber/Tesla rivalry. Uber is currently valued 36% more than all of Tesla, based on the potential of its ride-sharing platform alone. Some of this discrepancy is most likely due to the fact that Uber is still private while Tesla is subjected to the scrutiny of Wall Street as a public company. However, the difference is still glaring.”

In the meantime, “Tesla’s car business already is nearing a $10B revenue-run rate, and its battery/solar business is yet another rapidly growing multi-billion dollar revenue stream. Uber has none of these exciting growth initiatives, and is on the cusp of being displaced by Tesla as the ride-sharing leader.” That said, we’re looking forward to seeing how this plays out as more information comes to light on the Model 3 and the Tesla Network.


*Source: Seeking Alpha

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

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6 Comments on "The Tesla Network Could Provide Healthy Competition In The Ride-Sharing Industry"

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“1,800 hours of driving annually” @ an average of 30 mph, that’s an additional 54,000 miles a year on the odometer.

I find the idea that ride-sharing will become a disruptive economic force to be bizarre and probably delusional, and ditto for the idea that a significant fraction of car owners are gonna give up the security and convenience of having their car available whenever they want it, by renting it out to strangers. I find these ideas as silly as claiming that Air BnB is gonna put motels and hotels out of business. Autonomous cars and a ride-sharing app on your smart phone might well be disruptive to the traditional taxi services, but it ain’t gonna have much impact on the number of people who will own cars. In fact, I think it likely that autonomous cars will increase car ownership, because those who currently can’t drive due to advanced age or some physical or mental disability, will be able to use fully autonomous cars as easily as anyone who can pass a driving test. Not to denigrate Air BnB; there are a lot of people, both those who offer Air BnB service and those who are customers, who are quite happy using the service. But the percentage of travelers who actually use Air BnB is only a tiny fraction… Read more »

It is beyond my comprehension that people are so willing to get into a stranger’s car and have that stranger take them somewhere (Uber), as opposed to a taxi that has regulations and established modes of redress should there be problems.

I think people are utterly insane to rent out their homes when they are out of town to total strangers (Air BnB), and so are the people for renting the home, because the liability would be immense (or risk of fraud by the home owner claiming they stole something or damaged something). Motels are everywhere, and most of them are serviceable.

So, since I’m clearly out of touch with respect to the Uber-type and Air BnB type business models, then I can only assume that Tesla’s network-type model will also be popular.

More of this Silicon Valley DISRUPTION silliness.

When autonomous revenue-generating cars (read: self-driving taxis) become viable, rest assured that you will have absolutely no part in it. Taxi companies will be scrambling to replace every driver with a headless car, and Uber’s ponzi-scheme business model will have long since collapsed.

I would never rent my car out to a stranger. Leave that to the rental companies.

Allowing customers to use the Tesla network to rent out their cars is ok, but I think Tesla should be glad to sell it’s cars to Uber and allow its customers to choose Uber or any other means to gain income from their cars.

Indeed. The idea that Tesla thinks it can tell its customers they can’t use their car for Uber service smacks of the same sort of “You don’t really own what you bought; we do” attitude that software and entertainment media companies have towards those who buy copies of their computer programs, movies, and videos.

Tesla needs an attitude adjustment here. Hopefully the courts will tell Tesla rather firmly that it can’t take away its customers’ rights, if Tesla ever tries to actually enforce that sort of restriction.

On the other hand, the courts have gone along with the legal fiction of a “shrinkwrap license”, as well as copyright in perpetuity, and treating a trademark as if the mark itself has some inherent value, rather than something that’s merely used to identify a product or company.

Sometimes the courts have abandoned common sense. For much more on the subject of how trademark protection has grown so far past its original intent, see: