How Tesla Motors Could Buy Uber
Since late July of 2016 I’ve mentioned this prediction to a few friends and the same thing inevitably happens. First they get wide-eyed followed by a Minion-esq “WHAAAAAAAAAAA?!”. Then they hear my reasoning. Then they ask if they should buy TSLA stock. Then we both wonder why I’m not running strategy at Tesla.
Ok, some of that is probably embellishment BUT I thought I’d write this down so that when it happens I can point to this post like, “hey look! I wrote a thing about this thing a while back and the thing happened because it’s now a thing!”
So without further ado…
The Backstory
Transportation is a one of those things that is viewed as a service, as a luxury, and a commodity. It’s very similar to water. *Queue curmudgeony voice*
Back in the day people had wells. They required a lot of upkeep, they were a pain to maintain, they provided absolute control and the feeling of complete autonomy when obtaining water and were necessary for your daily life. You held a sense of pride about your well’s water and people even said things like, “I hate the water and grandma’s house.”
Then we had massive plumbing and water infrastructure projects linking everyone to a shared system with toilets, faucets, and water fountains providing this commodity. The level of pride you felt about the massive and shared water system, and the level of control you had over it, went down. But the convenience and availability factor went way up.
Then we started carrying water with us. Water bottles, Nalgenes, Camelbak systems, SmartWater, enhanced water, “vitamin” water — we took back control in portability and pride in quality of water. Convenience is way up. Pride is way up. Portability is way up.
Everything is way UP!
The same thing is beginning to happen with cars, and transportation in general.
The Big Picture
Uber
Uber is awesome. Borderline magic. I can be in most cities in the world (looking at you and your dumb politicians Austin, TX) and summon a car to my location with my phone and be taken anywhere. I don’t have to take my wallet out. I don’t have to wait outside for the car. I don’t have some awkward fight with a stranger about who saw the Uber first. With the latest app update I can set the color of the Uber logo badge in the front windshield so I can identify my Uber in a sea of Ubers. I don’t even need to talk with the driver if I don’t want to. I mean, it’s Uber not Lyft…right?
Uber has a global infrastructure already built. But Kalanick has already stated that the need of a driver is Uber’s greatest weakness.
Tesla
In the summer of 2014 my dad got in a very bad car accident when an idiot 20-year old in a pickup truck texting on his phone careened into my dad while he was at a red light and the idiot was going 40–50 miles per hour.
He’s fine now but the car was totaled and I’m eternally grateful to Lexus for designing a car with crumple zones that allowed my dad to walk away from a crash like that. Seriously, the thing looked like an accordion.
So a few days later we went to test drive the safest car on the road.
We testdrove the P80? The P100? The P90? No, that’s the gun from Golden Eye. Bottomline, it was the top end model they had. It was a hot 97+ summer day in Georgia. Gold Bond was a 100% necessity and the car had been parked on hot asphalt. After turning the car on it was 65 degrees inside within 30 seconds. I was sitting in the backseat. We hit the road and the guy told dad to open her up.
My ears touched.
Unless you’ve actually experienced the acceleration of an electric car like the Tesla you have no idea how — . There’s no way to describe what — . It’s like being in a life size RC car that just goes!
Tesla was founded and is currently led by real life Lex Luthor super genius Elon Musk.
When he was the primary financier and starting the company he wrote and sent his overarching plan (aptly called the Master Plan) to his investors and team.
In short the master plan was:
Build sports car
Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options
Don’t tell anyone.
Maybe he’s more like a technology building Tyler Durden than Lex Luthor. That master plan was published on August 2, 2006. Then on July 20, 2016 he published the Master Plan, Part Deux.
In short, the Master Plan, Part Deux is:
Create stunning solar roofs with seamlessly integrated battery storage
Expand the electric vehicle product line to address all major segments
Develop a self-driving capability that is 10X safer than manual via massive fleet learning
Enable your car to make money for you when you aren’t using it
With the expected release of the Model 3, which will be a mid market affordable fully electric vehicle with autopilot, we’re well on our way to crossing off the first two steps. Just look at the most recent software update.
- High-speed Autosteer
- Lane Departure Warning
- Summon your car remotely
- Parallel Autopark
- Auto Lane Change
The Problems
Anyone who’s had more than one Uber ride knows how hit or miss it can be. I’ve had some absolutely amazing rides with Uber where the driver was super cool and accommodating and gave me good advice about the city we were in and helped me with my bags and had a very clean car.
I’ve had other great rides with Uber where I simply got in, verified my name, and then got out at my destination. These are delightful in that I didn’t have to say anything. The Uber was like my own private metro.
Unfortunately there are times when you get Uber rides that are less than stellar. Family Guy knows what I’m talking about.
I should write as a disclaimer that my inclusion of that video is only to say that sometimes Uber drivers are loud obnoxious individuals. Nothing about that video or my comments is mentioning or degrading a particular race and if you thought it did the problem likely lies with someone else. Ok, back to the main thought.
So there’s a huge variance in the Uber experience and a complete lack of Quality Control. There can be all different kinds of cars. All different types of people. All different types of driving styles. And all different levels of safety.
It’s a bit like saying you use a PC. Sometimes they can be really great powerhouses. Other times they can be cobbled together pieces of s — .
The Future
It’s Monday morning. Your Model 3 unplugs itself from your Tesla Powerwall that’s been charged from your Solar Roof at 7:00 AM, opens the garage door, backs into the driveway, and patiently awaits your entrance. You climb into the optional driver seat as you hold coffee in one hand, phone in the other, and begin reviewing the draft of the latest client deck as your Model 3 drives to your office and drops you off at the front door.
Your car then switches to Valet Mode (keeping your personal information private), turns on the dash mounted Nest Cam, and lists itself on the “Tesla AC” (for Alternating Current and Automated Car).
Elsewhere a visiting business man pulls up the TAC app on his phone and summons the closest Tesla. It’s your car. He enters with his destination already in the app. Your car drives him there completely autonomously while he controls the stereo and climate controls from his phone. He doesn’t have a suitcase but has access to the trunk that you’ve made available (you keep the Fronk for yourself).
When he completes the ride his card is charged and you immediately receive a notification that your Model 3 just earned you $17. This continues for the whole morning.
At noon your car picks up a group of college students headed to lunch. Your car knows you have a lunch meeting because it’s synced with your calendar but somehow these college students been approved to be TAC members. As they go to lunch one of them spills in your car.
The spill is registered by the image processing of the Nest Dash Cam and the riders are immediately charged a $100 detailing fee (which they could try to fight but, again, there’s a video). You also receive a notification and can watch them as they awkwardly struggle to use their dumb millennial scarfs to try to soak up the liquid.
Your car drives to the nearest Supercharge station and plugs itself in for a mid-day charge. As it pulls into the parking lot the on-site rep gets a notification that there’s been a spill and goes to your car to perform a detailing.
30 minutes later your car is charged, in working order, and smelling fresh.
At 5:15 you’re picked up by your car, driven home, and it parks itself in the garage while a Power Arm plugs itself into your car to charge from the energy earned by your Solar Roof now being stored in your Powerwall.
The car drove for 9 hours on its own. It completed 30 rides. Each ride lasted on average 12 minutes. In between rides there was an average wait time of 6 minutes. It charged an average of $18 per ride. Your detailing was covered by your monthly TAC Service plan. Tesla took an average of 10% of each ride in fees. Your car earned $540. Tesla made $54. You made $486.
Even if the monthly TAC Service plan is $1,000 your car is now earning $9,720 per month while only working Monday through Friday. That’s more than I currently make from my full-time job.
That’s a good Monday.
The Infrastructure Needed
The pieces of infrastructure needed to complete this vision of the future, and the checked off ones that are already here, are:
- Supercharging stations √
- Onboard Internet √
- Valet Mode √
- Linked Credit Card and In App Payments √
- GPS Tracking of vehicle √
- TAC app
- Full Autopilot
- Politicians who won’t be dumb and block something like this
We already have 5 of these. If current indicators are any guide our biggest struggle will be #8.
The second Tesla perfects its full autopilot capability, Uber’s valuation drops by 10% at least. Why?
“Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.”
With full autopilot a Tesla becomes even more of an icon. It becomes like the first generation iPhone. You want and will go out of your way to experience it. If you landed in a new city and needed to get somewhere and had two options…
Option 1: Uber
No control over the type of car you get, the type of driver you get, the type of driving style you experience but all the innate benefits of Uber.
Option 2: TAC
Guaranteed to get an autonomous Tesla with the same level of safety and automated driving capabilities every time but at least $10 more than the same distance ride with Uber.
I’m choosing a TAC ride every time.
Roadmap
Now there’s a lot that Tesla could do to ensure the drive to this future is a successful one and it’s in no way necessary for them to actually buy Uber. It’s entirely possible that when Tesla builds the TAC network it becomes the new standard for luxury ride sharing, Uber moves to a “Chick-fil-A” good food quickly status, and Lyft becomes the fast food we all know it is. However, there are a number of things that Tesla can do to both prepare for and sustain this type of future.
1. Supercharge stations
This goes without saying but the more of these there are the better. Not only do they put power into the grid when not being used by vehicles (giving Tesla corporate a nice tax revenue stream and political incentive for putting them in an area) but they are an obvious hub for high end retail and lifestyle centers. The Model 3 will be the first “low priced” Tesla so the likelihood that companies with an ICP of $75K+ annual income would do well building around Superchargers is pretty high.
2. Integrations
You can imagine a ton of integrations to be had with a platform like this. Not only something like the Nest Dash Cam. Pressure activated floor mats. Smart, in-car, air fresheners. There’s a range of hardware and software integrations that could make a TAC ride the most delightful experience ever. Tesla should start pursuing these relationships now.
3. Embrace The Simple
Uber’s recent App redesign embraced a flat UI look while trying to cram as much as possible into the actual UX. Info about the driver, the car, the surrounding restaurants, ads, etc. It’s the kind of attempted but disjointed continuity you’d expect from a company that doesn’t actually control the hardware used in its service.
Tesla doesn’t have this issue. There’s fantastic opportunity to have a completely holistic experience between the TAC app, the car, and the renter’s supposed web-based portal where they can view the location and live internal video of their vehicle.
4. Autopilot the R&D
Now nothing tells me this isn’t one of Tesla’s main pushes right now, aside from the Gigafactory and meeting the delivery deadline of the Model 3 which, lets be honest, no one really believes they’ll make anyway. However, I want to go on record saying that Autopilot is the single greatest investment the company could possibly be making right now.
Yes, the Gigafactory is probably a close second if not economically first. But Autopilot gives Tesla something that a battery plant doesn’t; data-driven emotional ammo.
We’ve already said that agreeable humans in the political sphere will be the biggest barrier to this future becoming a reality. But humans get tired. Humans get drunk. Humans forget to look both ways before merging into traffic. Humans are idiots and text on their phones while driving their stupid pickup trucks and crash into dads. A perfected Autopilot allows any Tesla-backing politician to truly show that they are fighting for families and supporting a safer world for all of us, from car accidents to global warming.
And you know what that’s going to feel like?
Stay curious. Stay brave.
Daniel
