February 21st, 2023

Currently it costs in the USA ~ $684/mo to drive 1000 miles with FSD subscription, insurance and energy costs. This works out to $0.684(0.69)/mile. How odd.

Most cars sit around doing not that much, most of the time.

As you decrease the number $684, you broaden the available market. Even starting with a couple buying a Model 3 to share, it becomes twice as economical as owning 1 for each person.

How many people can share a vehicle then? 4? 8? More?

A pay-as-you-go cost per mile system could make more money per car by allowing more users access to pay per mile. Instead of selling the cars to customers that are owners, you rent per mile. At $0.69/mile Tesla would be collecting enough for insurance, fuel, lease and FSD and undercutting Uber by ~69%.

Perhaps you could have a mode preference in the Tesla app, private or public. Public transportation costs less ($0.420), but you car pool.

Elon predicts an order of magnitude increase in vehicle value. If you exclude the $200/mo FSD charge (because the step change is based on FSD and should only be included as added FSD revenue) and you exclude insurance and fuel, you are left with just the lease payment of $334/mo.

Therefore my expectation would be that robotaxis taget revenue would be ~$3340/mo.

The car could earn this with 4840 miles @ $0.69/private mile or 7952 miles @ $0.42/public mile.

The 7952 miles carrying 5 public passengers, would charge each passenger individually and could be achieved in as few as 1590 miles. But assume it takes all 7952 miles driving a single public passenger. Then the robotaxi would have to drive 7952/28= 284 miles per day. But if we assume 50% of miles driven are wasted, we should expect the worst case to be double to 568 miles/day. This averages out to 23 miles/hr which seems quite reasonable for a hard working Tesla.

The numbers are quite nutty. Of course, the worse case is a down car. And these rate estimates could be too high. But the upside factors could be quite significant as well. If Elon had in mind including FSD, insurance and fuel costs when factoring in the order of magnitude increase, then this basically doubles. If more private fares occur or have higher rates or better logistics, you get additional gains. Higher utilization potential as well.

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I am long TSLA and TSLA options. I am not a financial advisor. Investing in anything comes with inherent risk. This is not financial advice.