ARK Investment Management said on Monday that Tesla Inc.’s TSLA driverless ride-hailing plans could unlock $11 trillion in revenue potential, exceeding the total addressable market that ride-hailing companies Uber Technologies Inc. UBER and LYFT Inc. LYFT target today.
What Happened: “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,” Ark Invest analysts wrote in their weekly newsletter.
The lower operating costs of electric vehicles as compared to gas vehicles could help Tesla undercut rival ride-hailing platforms and the lower cost per mile could make it more profitable than owning a car, they said.
“Without safety drivers, Tesla has suggested that, at scale, its robotaxi rides will cost consumers only $0.30-0.40 cents per mile, slightly higher than ARK's estimate of ~$0.25 per mile but well below current ride-hail costs of ~$2 per mile and personal car ownership costs of ~$0.70 per mile,” Ark said.
Why It Matters: During its third-quarter earnings call earlier this month, Tesla CEO Elon Musk said that the company expects to start a ride-hail service in Texas and California starting next year, subject to regulatory approval.
However, the vehicles might not all operate as driverless robotaxis but with a driver as some states demand it until the company touches certain milestones in terms of miles and hours driven, the company then said.
However, Musk expressed confidence about the company operating driverless paid rides sometime next year.
Tesla also unveiled a no-pedal, no-steering wheel dedicated robotaxi product earlier this month called the Cybercab. Cybercab, Musk then said, will enter production ‘before 2027’ and will be priced below $30,000. Until then, the ride-hail fleet will be composed of the company’s Model 3 and Model Y.
Price Action: Tesla’s stock declined 2.5% on Monday to close at $262.51. Year-to-date, Tesla’s shares are up 5.7%, according to Benzinga Pro data.
Uber’s stock closed marginally up by 0.1% at $77.69, while Lyft gained 3.6% to close at $13.89 on Monday.
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Photo courtesy: Tesla
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