If a Tesla Cybercab fleet were profitable, Tesla wouldn't sell you one

ungreased0675

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.

treetalker

accountability sink

tahoeskibum

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.

gyanchawdhary

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”

contravariant

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.

delichon

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.

amelius

The reason Tesla won't sell me one is that I'm not buying anything from Musk.

gricardo99

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.

greenmilk

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/

fieryscribe

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.

amazingamazing

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.

Mountain_Skies

Local owners can deal with local governments easier and with more finesse than a trillion dollar company.

bluGill

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.

amluto

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.)

anthonybourdain

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.

juancn

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).

yellowapple

If a Toyota Prius taxicab fleet were profitable, Toyota wouldn't sell you one.

PaywallBuster

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

dabinat

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.

riknos314

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.