One problem in your analogy, for McDonalds, the franchisee is the one who actually operates the business.
For the Cybercab, Tesla is the one operating it via "Full Self Driving", their app, and the Tesla rideshare network. As the owner, the only thing you do is own it, insure it, have a place to park it, and take on the risk of what happens if the vehicle registered to you is in an accident. Clearly, a pretty one-sided assignment of risk.
Actually, while I still like your point there really is still a lot of operational work.
You need to clean, inspect, repair, insure, secure and charge the cars. To do so efficiently you will need to custom develop premises full of chargers and efficient charging and cleaning infrastructure.
That absolutely is operationally intense. Premises, permits, construction and then significant operations.
Maybe? It's how McDonald's runs things too. They make the food centrally and ship it to franchises. They take on brand risk, food logistics at scale and so on. Franchisees deal with local demand, operations, hiring, local laws and so on.
It's not an exact 1:1, but that seems to be the model here. Tesla does the things that can scale (FSD, manufacturing, etc.) and operators do the things that can't.
They could, but running local operations isn't his forte, preference or interest, it seems. Even if he had a massive fleet of these, he'd have to navigate local laws, demand, operations and logistics.
His revealed preference is to run things centrally and at massive scales.
> They could, but running local operations isn't his forte, preference or interest, it seems. Even if he had a massive fleet of these, he'd have to navigate local laws, demand, operations and logistics.
Companies have to convince potential franchisees that they will be successful. Usually, the franchiser needs to already be wildly successful and have a playbook of how the franchisee will also be successful and how the franchiser will protect them, often via regional exclusivity.
I don't know if Tesla has proven that their own fleet is successful.
The key thing here is liability. A McDonald’s franchisee is protected if the thing that makes someone sick was a result of bad food supplied by the McDonalds corporation. In the case of Tesla, irrespective of the self driving software the Tesla corporation provides, the “franchisee” is always the one liable.
I was going to mention that but I don’t know about it but assume they have some interesting supply chain, inventory management, marketing type software that no one will see, and just think about the POS, in store displays and web and mobile applications that millions of users interact with daily
actually most franchise restaurants are not profitable and eventually go out of business. subway is famous for being basically a pyramid scheme that only makes money by fleecing aspiring restaurateurs. mcdonald's is an exception because they are primarily a real estate company and commercial landlord.
Most things go out of business. That's why the franchising model exists. Local owners know their local market best and they take a calculated risk on it.
From what I understand, McDonald's franchisees can make 5-15% of gross revenue of their location. That's a decent return, along the lines of other investments. As with all investments, you may lose too.
> Tesla is now asking businesses whether they’d like to buy and operate their own fleets of Cybercab robotaxis on its network.
Would you like to pay for the privilege of using our network, with hardware you buy from us, in order to subsidize our costs of running that network for ourselves so our cost turns into a profit, so we can then compete with you on that same network?
The author misses the difference between cashflow and profit entirely.
Selling a car today gives Tesla the full profits of that hardware production today. Running that car as a robotaxi means that Tesla eats the costs of the hardware today in exchange for a larger total profit collected over several years.
So operating a fleet gives the company access to more long-term profits at the cost of decreasing the bank balance today (negative cash flow), where selling the cars lets the company fill the bank account right now (positive cash flow) at the cost of limiting long-term profitability.
The decision to prioritize immediate cash flow vs long term profits depends on the financial position and overall strategy of the company.
Tesla can do both. There will undoubtedly be a fee to join and use the Tesla ridesharing platform - I would expect that every Cybercab sold to require, at the minimum, the monthly $100 FSD subscription. On top of that, Tesla would take a cut off of all rides that cannot be negotiated.
Any franchisee contract would also need to have some sort of rules that prevent Tesla from running their own taxis themselves and undercutting their business, if it turns out to be too successful.
Tesla is not eating the cost of anything, they want to have their cake and eat it too. this will go as well for them as bunch of other things in recent years but just maybe this time people will realize they have been getting scammed for decade+
people r tryin' to equate this to a franchise model, some the amazon 3rd party model.
nope - this is just Elon raising money without going to the stock market or government but directly to Elon worshipping idiots.
he benefits two ways - interest free Capex, then higher stock prices by reporting higher number of cybercabs on the road. & guess who takes a punch to the mouth - the Elon worshippers.
with the amazon model | franchise models there's shared risk - not exactly equal but shared risk.
with Elon - one person is eating the risk, while one person eats 90% of the gains.
you could make this same argument about any business and any mechanism that raises outside capital to expand.
If McDonald’s restaurants were profitable, they wouldn’t sell franchises. Except it’s been an incredibly successful way to raise capital and expand, for both franchisees and McDonalds.
If company about to IPO were a great investment, they wouldn’t IPO. Except the stock market has been an incredible mechanism for company and capital growth.
Vertical and integration like that has been very commonly and often tried in lots of different industries. Sometimes it works out, sometimes it doesn't. In the case of Tesla the work required to make a car and the work required to make a self-driving car are very similar. However, the work required to run a taxi company has very little to do with the labor required for use of the buffs. Thus, for Tesla and most car companies it is best to say I'm going to do what I do best and let someone else deal with that other hard part. It just loses too much focus to try and vertically
Taxis are a tiny niche in the transport market. They're certainly very profitable for the small number of people who run the companies, but they're a tiny niche and they will always be that way. There are too many advantages to owning your own personal automobile when you drive a lot. In turn, people who are driving their own automobile vehicle are the target of all car companies, taxies are an important niche but that is not enough to make a successful car company.
Let’s consider the only major example of the alternative: Waymo. Waymo is expanding rather slowly, and I imagine there are several factors. Building the cars is capital intensive. Adding a new market requires some regulatory work, and it also requires acquiring and building a lot for the cars to park at and charge at. And hiring people to charge them. (The labor cost is a drop in the bucket — there is no reason to put serious effort into automating this.)
Perhaps Tesla wants to focus on its actual strength: building the cars. And perhaps they want to outsource the regulatory issues and the problems when all the cars get stuck in the same power outage, etc.
(I’m charitably assuming here that Tesla can actually build a viable robotaxi.)
They allow 3rd party sellers in their platform and in their warehouses
There's many reasons for this but they include:
Somebody will compete in every segment: building the taxis, operating them, and vertically integrating them. Put another way - some people will buy taxis in this model either way, so Tesla is incentivized to participate in this also. That helps them get economies of scale.
It also of course minimize risk. But not just the obvious kind. It also minimises risk of a niche competitor taking the buy to own robotaxi market and from that wedge becoming a substantial competitor.
But also like Amazon - operators should worry about Tesla taking the data they have about most successful routes and using that to compete directly in the must lucrative identified markets.
Hertz infamously came out of bankruptcy guns-blazing and purchased 100k cars for $4.2 billion and helped drive Tesla's market cap above $1 trillion in 2021
By 2024 they had begun dumping the EVs and reported a $2Bn loss as a result.[0]
The HTZ stock price has fallen 90%.[1]
Somehow TSLA is still trading in the neighborhood of that 2021 peak. Currently trading at a PE ratio of over 300, despite declining revenues[2].
He's an effective conman for those with money that needs investing. His track record is objectively bad[0] and that doesn't matter as long as he can say the right thing at the right time to keep the stock high and his investors happy and believing that the breakthrough is just around the corner.
Many of his investors probably understand that they're holding a bunch of very expensive tulip bulbs but the opportunity to profit off of the greater fool is too great to ignore as long as they don't mistime the peak. With the amount of loose money sloshing around the global economy, he can probably continue riding this wave until some black swan event forces everyone to confront reality.
I think that's a pretty fair take on the situation overall. There is the potential of a merger between Tesla and SpaceX which might help him paper over the short-term issues Tesla is facing around deliveries, largely due to the public backlash around his political medling and DOGE.
Right, that's the point. It doesn't matter if he delivers on his promises as long as people believe he will eventually and the stock goes up. People have also made money investing in Ponzi schemes but they're still Ponzi schemes.
The franchising itself isn’t the problem - it’s a valid way for a company to scale up a service.
The issue is that they’re rolling it out before Tesla’s self-driving software has been proven to be safe. And there are questions about whether a vehicle without a steering wheel or side mirrors is actually road-legal.
Additionally, I’m not sure what kind of checks Tesla is doing for the franchisees. Will they let them roll out a service anywhere they like, irrespective of whether FSD is optimized for those road conditions? Based on the way they’ve approached FSD with consumers, my guess would be yes.
I see this as liability shifting exercise first, scalability tool second, and Elon's desire to deliver on his 2016 promise third.
The scalability point is compound. We are talking charging, storage, and cleaning infra as well as regulatory burdens. Scaling that is hard and local, so it does make sense to outsource that. I believe the deal is really raw because of the risks involved, but Elon does have a decent track record of delivering on investment. Some of these entities will be able to perform regulatory capture and become a decent cash cow.
Amazon subcontracts their delivery services, so there are probably additional factors driving Teslas decision.
My guess is the insane liability a car accident can create. Trucking companies have had to pay out millions, even for accidents where they weren’t at fault.
A big part of Amazon's "Delivery Service Partner" program is that it creates many smaller work-forces rather than one big one, which prevents unionization. On the other hand, Amazon can probably afford accident insurance.
The fact that robot taxi's won't form a union makes this rather unlike Amazon DSP's. I suspect the article is correct. There simply aren't net profits here for operators.
I would bet that if self driving software was involved in any accident, it is the company who developed the software who will be paying, even if someone else owns the car.
As long as the first two letters in LLC hold up, lots of people would be willing to enter into a new market that appears to have a lot of potential upside and profit, with the downside limited to whatever they invested, or borrowed, to get it going.
Opportunity cost is the standard, not profitability. Companies generally try to invest in their core competencies and outsource the rest. The Nvidia deal with Groq is an example. They spent $20B for Groq's inference technology while leaving their profitable cloud services business alone. Selling shovels instead of mining gold can be a rational choice even when gold mining is profitable. And the shovel companies do better when gold mines are profitable.
Unfortunately Tesla's great accomplishments do not lie in the car space, but in the getting investments space. In finance. Which means they will have the profitability right, exactly, guaranteed.
Take the Tesla metal casting advance (single-press casting, or as Tesla calls is "Gigacasting"): it is mostly the result of investment, more specifically all other carmakers deciding they weren't willing to risk it, no matter how many papers said the simulations were correct. Tesla risked it, it worked exactly like the (mostly German made) theory and simulations said it was going to work, and now everyone and their mother (ie. even non-car companies) are using it. Result: Tesla has a patent on it, that nobody has licensed since they were working on it decades before the first Tesla engineer thought of it. The idea was literally available in CAD software before Tesla started to work on it (not that I want to claim there wasn't a LOT of design + validation + testing + integrating + ... work left to be done)
This principle is generally true for all Elon Musk companies, and most of their accomplishments/vision. SpaceX is not even close to the first to land a rocket, for example (that was McDonnel-Douglas). Nor were they the second, or the fifth. Oh and only one of the companies that attempted it before SpaceX needed 2 tries, all others succeeded immediately, or the company died, some succeeded, and the company still died. SpaceX, by contrast, needed 7 crashes before succeeding for the first time (one of their rockets never tried to land on account of blowing up during ascent, I'm counting that one), and 17 tries before they first tried to move it to production.
I'm not to say integrating everything, massively expanding the scope/scale of these applications, getting the investments, and getting it commercially operating isn't a gigantic accomplishment, but it is not inventing it at all.
Elon Musk's constant talk about inventing and "work from first principles" ... is therefore kind of total bullshit. He has never done that, and neither have his businesses.
Bitmain could produce and run all the bitcoin miners for themselves, but starting as a "startup" they need to raise funds to scale, hence selling to 3rd parties...
even to date after scaling to millions of units sold
The idea that you buy a cycbercab to make money for yourself seems like a side benefit. Why should anyone own cars anymore anyway? We will all just use Uber; Tesla and Waymo need Uber; they both benefit.
Not really, kind of like Uber doesn't buy its own cars. The CyberCab owner provides the capital and parking spot and some maintenance, while Tesla takes a cut, just like Uber does. I'd be happy to have my car earn money for me while I'm away at office or away on a business trip.
Uber doesn't buy its own cars because it isn't profitable given the depreciation and originally the higher risk of getting someone declared an employee. If they are choosing a car and losing money on it they are an entrepreneur. (Also Tesla doesn't want you to rent your car as that reduces their market so they want to sell another one in a fleet.)
I don't know if that's true, especially when those "local governments" are cities with millions of people. You can get permission to operate in a small city, but if you can't drive outside of it, that really limits the usefulness. Small cities aren't a focal point of taxi services either.
Waymo didn't even bother dealing with any of the small cities in the San Francisco Bay Area, they worked directly with the state of California in order to expand their service area.
I may buy one if it works. It would pay for itself in about 3 years. Parking where I am at is about $50 a day. If this thing can drop me off and go make me money it is a no brainer.
Does the pay off calculation include the frequent interior cleaning any rental car will need to be kept in service 24/7? Both normal wear and tear and spills, vomit, blood, etc that users are motivated by fees to pretend they didn't do until the next user or two after them reports it.
It's an opinion piece, I'm at a loss as to how it could be "fake". Regardless, the owner of the site is still pissy about...something to do with Tesla, I've since forgotten. Doesn't make him wrong, but it's certainly a consideration when reading Electrek.
If McDonald's was profitable, they wouldn't try to franchise it.
That's what this is. You take on operating costs and you understand your local market. They own the brand.
One problem in your analogy, for McDonalds, the franchisee is the one who actually operates the business.
For the Cybercab, Tesla is the one operating it via "Full Self Driving", their app, and the Tesla rideshare network. As the owner, the only thing you do is own it, insure it, have a place to park it, and take on the risk of what happens if the vehicle registered to you is in an accident. Clearly, a pretty one-sided assignment of risk.
Actually, while I still like your point there really is still a lot of operational work.
You need to clean, inspect, repair, insure, secure and charge the cars. To do so efficiently you will need to custom develop premises full of chargers and efficient charging and cleaning infrastructure.
That absolutely is operationally intense. Premises, permits, construction and then significant operations.
That seems like even more downside risk, expenses, and maintenance that don't generate any revenue for you the vehicle owner.
Maybe? It's how McDonald's runs things too. They make the food centrally and ship it to franchises. They take on brand risk, food logistics at scale and so on. Franchisees deal with local demand, operations, hiring, local laws and so on.
It's not an exact 1:1, but that seems to be the model here. Tesla does the things that can scale (FSD, manufacturing, etc.) and operators do the things that can't.
That's actually a very good point.
Also if Elon Musk has a demonstrable superpower it's the ability to raise capital. So they really could order 100,000 of these themselves.
They could, but running local operations isn't his forte, preference or interest, it seems. Even if he had a massive fleet of these, he'd have to navigate local laws, demand, operations and logistics.
His revealed preference is to run things centrally and at massive scales.
> They could, but running local operations isn't his forte, preference or interest, it seems. Even if he had a massive fleet of these, he'd have to navigate local laws, demand, operations and logistics.
Doesn't Tesla operate its own dealer network?
Companies have to convince potential franchisees that they will be successful. Usually, the franchiser needs to already be wildly successful and have a playbook of how the franchisee will also be successful and how the franchiser will protect them, often via regional exclusivity.
I don't know if Tesla has proven that their own fleet is successful.
The key thing here is liability. A McDonald’s franchisee is protected if the thing that makes someone sick was a result of bad food supplied by the McDonalds corporation. In the case of Tesla, irrespective of the self driving software the Tesla corporation provides, the “franchisee” is always the one liable.
> In the case of Tesla, irrespective of the self driving software the Tesla corporation provides, the “franchisee” is always the one liable.
Precedent for this?
It's more than that, Tesla owns the brand, the manufacturing, and the software.
They are much more than McDonalds.
But indeed your comparison is an apt way to reply to this "article".
McDonald’s owns the brand, supply chain and real estate.
And the software, if the saga around the constantly-broken ice cream machines is any indication.
I was going to mention that but I don’t know about it but assume they have some interesting supply chain, inventory management, marketing type software that no one will see, and just think about the POS, in store displays and web and mobile applications that millions of users interact with daily
The POS are still XP last I checked haha
But critically they don't own the sale. Will Tesla own point of sale, or will the Cybercab owner?
actually most franchise restaurants are not profitable and eventually go out of business. subway is famous for being basically a pyramid scheme that only makes money by fleecing aspiring restaurateurs. mcdonald's is an exception because they are primarily a real estate company and commercial landlord.
Most things go out of business. That's why the franchising model exists. Local owners know their local market best and they take a calculated risk on it.
From what I understand, McDonald's franchisees can make 5-15% of gross revenue of their location. That's a decent return, along the lines of other investments. As with all investments, you may lose too.
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Telsa is going for a certain rough aesthetic with both the Cybertruck and Cybercab branding.
The rough: youre living in apocalyptic hellscape because money buys mental insecurity, not love. Better armor up and avoid humanity!
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I agree. National Socialists and Fascists are unacceptable. Also their cousins - International Socialists.
Any ideology that has a body count measured in the millions is my enemy.
So capitalism is also your enemy?
at this point, kinda yea
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> Tesla is now asking businesses whether they’d like to buy and operate their own fleets of Cybercab robotaxis on its network.
Would you like to pay for the privilege of using our network, with hardware you buy from us, in order to subsidize our costs of running that network for ourselves so our cost turns into a profit, so we can then compete with you on that same network?
He must have been having lunches with Bezos.
The author misses the difference between cashflow and profit entirely.
Selling a car today gives Tesla the full profits of that hardware production today. Running that car as a robotaxi means that Tesla eats the costs of the hardware today in exchange for a larger total profit collected over several years.
So operating a fleet gives the company access to more long-term profits at the cost of decreasing the bank balance today (negative cash flow), where selling the cars lets the company fill the bank account right now (positive cash flow) at the cost of limiting long-term profitability.
The decision to prioritize immediate cash flow vs long term profits depends on the financial position and overall strategy of the company.
Tesla can do both. There will undoubtedly be a fee to join and use the Tesla ridesharing platform - I would expect that every Cybercab sold to require, at the minimum, the monthly $100 FSD subscription. On top of that, Tesla would take a cut off of all rides that cannot be negotiated.
Any franchisee contract would also need to have some sort of rules that prevent Tesla from running their own taxis themselves and undercutting their business, if it turns out to be too successful.
Tesla is not eating the cost of anything, they want to have their cake and eat it too. this will go as well for them as bunch of other things in recent years but just maybe this time people will realize they have been getting scammed for decade+
Bit of a weird world where we don't have self-driving cars but we did manage to automate the writing of articles lamenting that fact.
Headfaked by Moravec's Paradox.
people r tryin' to equate this to a franchise model, some the amazon 3rd party model.
nope - this is just Elon raising money without going to the stock market or government but directly to Elon worshipping idiots.
he benefits two ways - interest free Capex, then higher stock prices by reporting higher number of cybercabs on the road. & guess who takes a punch to the mouth - the Elon worshippers.
with the amazon model | franchise models there's shared risk - not exactly equal but shared risk.
with Elon - one person is eating the risk, while one person eats 90% of the gains.
you could make this same argument about any business and any mechanism that raises outside capital to expand.
If McDonald’s restaurants were profitable, they wouldn’t sell franchises. Except it’s been an incredibly successful way to raise capital and expand, for both franchisees and McDonalds.
If company about to IPO were a great investment, they wouldn’t IPO. Except the stock market has been an incredible mechanism for company and capital growth.
Vertical and integration like that has been very commonly and often tried in lots of different industries. Sometimes it works out, sometimes it doesn't. In the case of Tesla the work required to make a car and the work required to make a self-driving car are very similar. However, the work required to run a taxi company has very little to do with the labor required for use of the buffs. Thus, for Tesla and most car companies it is best to say I'm going to do what I do best and let someone else deal with that other hard part. It just loses too much focus to try and vertically
Taxis are a tiny niche in the transport market. They're certainly very profitable for the small number of people who run the companies, but they're a tiny niche and they will always be that way. There are too many advantages to owning your own personal automobile when you drive a lot. In turn, people who are driving their own automobile vehicle are the target of all car companies, taxies are an important niche but that is not enough to make a successful car company.
What an absurd lack of nuance.
Let’s consider the only major example of the alternative: Waymo. Waymo is expanding rather slowly, and I imagine there are several factors. Building the cars is capital intensive. Adding a new market requires some regulatory work, and it also requires acquiring and building a lot for the cars to park at and charge at. And hiring people to charge them. (The labor cost is a drop in the bucket — there is no reason to put serious effort into automating this.)
Perhaps Tesla wants to focus on its actual strength: building the cars. And perhaps they want to outsource the regulatory issues and the problems when all the cars get stuck in the same power outage, etc.
(I’m charitably assuming here that Tesla can actually build a viable robotaxi.)
There are also supply chain constraints which prevent Waymo's vehicle suppliers from rapidly scaling up production.
I wonder if the best analogy here is Amazon.
They allow 3rd party sellers in their platform and in their warehouses
There's many reasons for this but they include:
Somebody will compete in every segment: building the taxis, operating them, and vertically integrating them. Put another way - some people will buy taxis in this model either way, so Tesla is incentivized to participate in this also. That helps them get economies of scale.
It also of course minimize risk. But not just the obvious kind. It also minimises risk of a niche competitor taking the buy to own robotaxi market and from that wedge becoming a substantial competitor.
But also like Amazon - operators should worry about Tesla taking the data they have about most successful routes and using that to compete directly in the must lucrative identified markets.
Hertz infamously came out of bankruptcy guns-blazing and purchased 100k cars for $4.2 billion and helped drive Tesla's market cap above $1 trillion in 2021
By 2024 they had begun dumping the EVs and reported a $2Bn loss as a result.[0]
The HTZ stock price has fallen 90%.[1]
Somehow TSLA is still trading in the neighborhood of that 2021 peak. Currently trading at a PE ratio of over 300, despite declining revenues[2].
Really wish I understood the Elon Musk voodoo.
[0] https://www.cnbc.com/2024/01/14/hertz-makes-agile-decision-t...
[1] https://finance.yahoo.com/quote/HTZ/
[2] https://stockanalysis.com/stocks/tsla/revenue/
He's an effective conman for those with money that needs investing. His track record is objectively bad[0] and that doesn't matter as long as he can say the right thing at the right time to keep the stock high and his investors happy and believing that the breakthrough is just around the corner.
[0] https://en.wikipedia.org/wiki/List_of_predictions_for_autono...
Many of his investors probably understand that they're holding a bunch of very expensive tulip bulbs but the opportunity to profit off of the greater fool is too great to ignore as long as they don't mistime the peak. With the amount of loose money sloshing around the global economy, he can probably continue riding this wave until some black swan event forces everyone to confront reality.
I think that's a pretty fair take on the situation overall. There is the potential of a merger between Tesla and SpaceX which might help him paper over the short-term issues Tesla is facing around deliveries, largely due to the public backlash around his political medling and DOGE.
Plenty of people have gotten rich buying Tesla stock.
Right, that's the point. It doesn't matter if he delivers on his promises as long as people believe he will eventually and the stock goes up. People have also made money investing in Ponzi schemes but they're still Ponzi schemes.
The franchising itself isn’t the problem - it’s a valid way for a company to scale up a service.
The issue is that they’re rolling it out before Tesla’s self-driving software has been proven to be safe. And there are questions about whether a vehicle without a steering wheel or side mirrors is actually road-legal.
Additionally, I’m not sure what kind of checks Tesla is doing for the franchisees. Will they let them roll out a service anywhere they like, irrespective of whether FSD is optimized for those road conditions? Based on the way they’ve approached FSD with consumers, my guess would be yes.
Except they are not "rolling it out".
What exists is a web page where you can express an interest in that offering.
But you can't buy a cybercab today.
This whole article is much ado about nothing.
Tesla has a page to gauge interest in something they might offer at some point in the future.
That's it. That's all there is to it.
I see this as liability shifting exercise first, scalability tool second, and Elon's desire to deliver on his 2016 promise third.
The scalability point is compound. We are talking charging, storage, and cleaning infra as well as regulatory burdens. Scaling that is hard and local, so it does make sense to outsource that. I believe the deal is really raw because of the risks involved, but Elon does have a decent track record of delivering on investment. Some of these entities will be able to perform regulatory capture and become a decent cash cow.
Amazon subcontracts their delivery services, so there are probably additional factors driving Teslas decision.
My guess is the insane liability a car accident can create. Trucking companies have had to pay out millions, even for accidents where they weren’t at fault.
A big part of Amazon's "Delivery Service Partner" program is that it creates many smaller work-forces rather than one big one, which prevents unionization. On the other hand, Amazon can probably afford accident insurance.
The fact that robot taxi's won't form a union makes this rather unlike Amazon DSP's. I suspect the article is correct. There simply aren't net profits here for operators.
I would bet that if self driving software was involved in any accident, it is the company who developed the software who will be paying, even if someone else owns the car.
Bold assumption until there is legal precedent set.
I would be very surprised if the manufacturer would sell you one without you agreeing to indemnify them.
> I would be very surprised if the manufacturer would sell you one without you agreeing to indemnify them.
Why would anyone other than a fool agree to indemnify Tesla against liability for a vehicle whose driving behavior is controlled by Tesla?
There are a lot of fools out there. The real question is whether a clickwrap indemnification would hold up in coult; I suspect it wouldn't.
Why wouldn't it? People are agreeing to indemnify and hold manufacturers harmless all the time. IANAL though.
As long as the first two letters in LLC hold up, lots of people would be willing to enter into a new market that appears to have a lot of potential upside and profit, with the downside limited to whatever they invested, or borrowed, to get it going.
And in that case, any indemnity clause won't be worth much - the manufacturer will end up paying most of any claim
Opportunity cost is the standard, not profitability. Companies generally try to invest in their core competencies and outsource the rest. The Nvidia deal with Groq is an example. They spent $20B for Groq's inference technology while leaving their profitable cloud services business alone. Selling shovels instead of mining gold can be a rational choice even when gold mining is profitable. And the shovel companies do better when gold mines are profitable.
Unfortunately Tesla's great accomplishments do not lie in the car space, but in the getting investments space. In finance. Which means they will have the profitability right, exactly, guaranteed.
Take the Tesla metal casting advance (single-press casting, or as Tesla calls is "Gigacasting"): it is mostly the result of investment, more specifically all other carmakers deciding they weren't willing to risk it, no matter how many papers said the simulations were correct. Tesla risked it, it worked exactly like the (mostly German made) theory and simulations said it was going to work, and now everyone and their mother (ie. even non-car companies) are using it. Result: Tesla has a patent on it, that nobody has licensed since they were working on it decades before the first Tesla engineer thought of it. The idea was literally available in CAD software before Tesla started to work on it (not that I want to claim there wasn't a LOT of design + validation + testing + integrating + ... work left to be done)
This principle is generally true for all Elon Musk companies, and most of their accomplishments/vision. SpaceX is not even close to the first to land a rocket, for example (that was McDonnel-Douglas). Nor were they the second, or the fifth. Oh and only one of the companies that attempted it before SpaceX needed 2 tries, all others succeeded immediately, or the company died, some succeeded, and the company still died. SpaceX, by contrast, needed 7 crashes before succeeding for the first time (one of their rockets never tried to land on account of blowing up during ascent, I'm counting that one), and 17 tries before they first tried to move it to production.
I'm not to say integrating everything, massively expanding the scope/scale of these applications, getting the investments, and getting it commercially operating isn't a gigantic accomplishment, but it is not inventing it at all.
Elon Musk's constant talk about inventing and "work from first principles" ... is therefore kind of total bullshit. He has never done that, and neither have his businesses.
It's a financial strategy, like DeRentas or Autonomy that lease cars to Uber drivers in Latam.
Essentially shift maintenance cost to the investors (all of it since in this case there are no drivers to share part of the cost).
Bitmain could produce and run all the bitcoin miners for themselves, but starting as a "startup" they need to raise funds to scale, hence selling to 3rd parties...
even to date after scaling to millions of units sold
If a Toyota Prius taxicab fleet were profitable, Toyota wouldn't sell you one.
The idea that you buy a cycbercab to make money for yourself seems like a side benefit. Why should anyone own cars anymore anyway? We will all just use Uber; Tesla and Waymo need Uber; they both benefit.
A self owned auto-uber that you can use all you want would actually be the first actually fully self driving car.
The reason Tesla won't sell me one is that I'm not buying anything from Musk.
Not really, kind of like Uber doesn't buy its own cars. The CyberCab owner provides the capital and parking spot and some maintenance, while Tesla takes a cut, just like Uber does. I'd be happy to have my car earn money for me while I'm away at office or away on a business trip.
This isn't making the point you think it is...
Uber doesn't buy the cars because it's not profitable.
They let the driver eat the depreciation, assume the capital risk, and deal with lemons and accidents.
No one drives Ubers thinking they're going to get rich, and I sure don't see companies buying up vehicle fleets to put into service on Uber.
Because it's a money losing proposition.
Why do you think Tesla is trying to also offload it onto suckers?
Uber doesn't buy its own cars because it isn't profitable given the depreciation and originally the higher risk of getting someone declared an employee. If they are choosing a car and losing money on it they are an entrepreneur. (Also Tesla doesn't want you to rent your car as that reduces their market so they want to sell another one in a fleet.)
Local owners can deal with local governments easier and with more finesse than a trillion dollar company.
I don't know if that's true, especially when those "local governments" are cities with millions of people. You can get permission to operate in a small city, but if you can't drive outside of it, that really limits the usefulness. Small cities aren't a focal point of taxi services either.
Waymo didn't even bother dealing with any of the small cities in the San Francisco Bay Area, they worked directly with the state of California in order to expand their service area.
I may buy one if it works. It would pay for itself in about 3 years. Parking where I am at is about $50 a day. If this thing can drop me off and go make me money it is a no brainer.
Skeptical it will work as advertised, though.
Does the pay off calculation include the frequent interior cleaning any rental car will need to be kept in service 24/7? Both normal wear and tear and spills, vomit, blood, etc that users are motivated by fees to pretend they didn't do until the next user or two after them reports it.
What if it gets damaged or a drunk customer vomits into it or otherwise soils it?
You can buy the TeslaCare package for just 9.99 a week, or 5000 a year
accountability sink
Dumb take but but I guess that journos gotta earn a living …
I bet his draft folder has a doc with the title “if US treasuries were profitable, US gov wouldn’t sell you one”
It’s a junk website. I know the word has bad connotations but literal fake news
It's an opinion piece, I'm at a loss as to how it could be "fake". Regardless, the owner of the site is still pissy about...something to do with Tesla, I've since forgotten. Doesn't make him wrong, but it's certainly a consideration when reading Electrek.
Low effort opinion piece, yes.
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