Tesla Plans to Launch a Robotaxi Network in 2020

Posted by MarketsandMarkets on May 3, 2019 6:06:06 PM
MarketsandMarkets

Tesla plans to launch the first robotaxis as part of a broader vision for an autonomous ride sharing network in 2020, CEO Elon Musk said during the company’s Autonomy Day. Musk confirmed that there will be more than a million Robotaxis on road next year. Robotaxi is an upcoming megatrend in the automotive industry. It is a disruptive technology that can lead to the development of new mobility models and provide vast opportunities for infrastructure development.

Prasoon Khare - Analyst : Automotive & Transportation Research at MarketsandMarkets™, shares his point of view as mentioned below:

Tesla Robotaxi Network

Musk has been laying out his vision of a robotaxi network since 2016. The company will provide a dedicated fleet of robotaxis in places where there aren't enough people to share their cars in the network. Robotaxis will essentially be any Tesla vehicle with autonomous driving functionality. The Tesla Network will be prolonged to the Model S, 3, and X, though Model 3 will be used as the company’s first Robotaxis. Robotaxis will be a huge competition for ride sharing players as all-electric cars hold a distinct cost advantage. Tesla estimates that running a Robotaxi will cost around USD 0.18 or less per mile. This challenges the USD 2- USD 3 cost per mile of the ride sharing companies.  Robotaxis are set to transform daily commute as autonomous vehicles offer a wide variety of driving systems. Many OEMs plan to launch robotaxis by 2020. Daimler has partnered with Bosch to develop self-driving electric cars in Germany, which could be seen on the roads by the early 2020s. Observing these rapid developments, OEMs and Tier 1s are likely to launch robotaxis and enter the ride sharing ecosystem.

ECOSYSTEM FOR RIDE HAILING SERVICES-1

Source: MarketsandMarkets™ Analysis

Impact on ride sharing

As Tesla is heading towards more autonomous features in its vehicles, it is also approaching a long-term goal of providing Uber/Lyft-like rides with its vehicles. Tesla’s entry into the ride sharing market could be a road for the company to reach new heights. Tesla is locking Uber, Lyft, and other similar companies out of its Autopilot technology with its prohibition on using Tesla self-driving technology for revenue outside of the network. All Tesla vehicles currently in production are equipped with the hardware necessary to support full autonomous driving in the future. Elon Musk’s estimates for the Tesla Network would allow the company to earn as much as Uber and Lyft, both of which take a 25% commission from the earnings of their drivers. Unlike Uber and Lyft, the Tesla Network would not involve drivers as the vehicles are fully autonomous. Thus, it will be earning money for far less effort than Uber and Lyft. Tesla ride sharing company is already running in Calgary, Canada. The Canadian car rental startup InOrbis transports travelers between Calgary and Edmonton using Tesla Model S and Model X vehicles. Tesla Network threatens to disrupt the ride sharing industry as it has a unique position in electric vehicle and autonomous technology, which will be the future. Automakers such as Cadillac, Audi, and Volvo are also working to release their own Level 5 self-driving fleets of vehicles first, to take control of the market before anyone else does.

ATTRACTIVE OPPORTUNITIES IN THE RIDE SHARING MARKET

e- Estimated; p- Projected     |     Source: MarketsandMarkets™ Analysis
Note: This market represents the Ride Sharing Market.

Conclusion

Tesla is a pioneer in the electric vehicle market and now in the autonomous vehicle market. The Tesla Network has the potential to distress the established ride hailing giants, like Uber, in significant ways. While Musk's robotaxi future looks tempting, a handful of suspense is still there. Tesla has to work towards providing charging infrastructure. Tesla has to figure how to sufficiently and efficiently charge its self-driving cars so that they do not malfunction in the middle of the road. The ecosystem of the autonomous ride sharing market consists of players such as Uber, Lyft, Waymo, and Cruise. Tesla has to establish itself as a key player in the Ride Sharing Market while facing stiff competition from these players. The robotaxi market is likely to witness a significant increase in demand with the recent technological advancements in electric vehicles and autonomous driving systems. Shared mobility is also a key driver for the robotaxi market. People are comfortable sharing rides, creating a good opportunity for companies such as Uber, DiDi, and Lyft to find a new sustainable source of revenue.

Considering the fact that more than 60% of the revenue generated per ride goes to the driver and eventually the Ride sharing service providers are left with little to no margins. Hence, Autonomous Taxies or Robo-taxies like proposed by tesla will help increase the margins per ride for Ride Sharing companies. Hence OEMs will play a very important role in developing Autonomous cars for the purpose of Ride sharing.   

Topics: electric vehicle market, automotive industry, ride sharing market

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