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Tesla ride-sharing program: exploring its practicality and real world benefits

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Many of the Tesla faithful sat with bated breaths waiting for the Master Plan Part 2 to be published. Once it did, we devoured every word, with some words more surprising than others. Making a pickup truck, while not surprising is thought-provoking. Ride-sharing as a concept, also not very surprising. Ride-sharing using the autonomously driven car that you personally own? Now there’s something to think about.

“In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are.” – Elon Musk

Let’s consider for a moment what this might look like.

Practicality 

My initial thought of an autonomous Tesla was ride-sharing within the same household. My spouse and I have jobs that are in opposite directions, but we also work different hours with him having the far shorter commute. That being said, it would technically be feasible for a car to drop me off at work and make it back home just in time to take him. Then, it would have plenty of time to come back to me before my work day is done. Driving me home would also be tight – but I think the car would make it just in time to drop me off and go grab him. (Anyone else getting wide-eyed at the thought of a car driving you around? I sure am!) The only downside that I can think of is that both of us, at times, like to run errands on a lunch break. Surely with a little planning we could just schedule who will have the car available mid day. For example, on his day the car wouldn’t come back to get me until later in the day. Should I need to use it, it could come back to me earlier. All of this sounds technically feasible but the miles would add up quickly. Over 90 miles a day, to be exact; double what we currently drive combined. This may be obvious, since the car is making each round trip twice, but on paper that distance really hits home. As for cost, our electricity use at home would clearly go up. What would go down, however, is the cost associated with having a second car. I only estimate that the Tesla costs us $50/month to power now but even if it went up to $150, that delta is far less than the savings associated with not having a second car to insure and maintain. (Let alone pay to own/lease, depending on how expensive a car you’d be giving up.)

Tesla Model 3 15" center touchscreen

In this regard, I see practicality as a wash. If technically feasible with your schedule as it would be with ours, it may work. Getting past the mental barrier of having only one car between two adults who drive and work full time however, may be a challenge. Tesla has shifted thinking in many ways already, so it’s possible this will as well. I keep trying to think of reasons why we need two cars but aside from our daily jobs, which a car that can drive us to negates, all I’m coming up with is the rare occasion where we both need to go somewhere different at the same time. Truth be told, I’m sure even that could be worked out in most cases. In those where it can’t? Summon up another autonomous Tesla to drive you where you need to be. Again, this comes with a cost but again, it pales in comparison to the cost to own a second car that spends over 90% of its life parked anyway.

Public Domain

Most Tesla owners I know treat their cars with extreme care. I am no exception. The thought of a stranger taking up residence in my car without me sends shivers down my spine. I guess there is only so much damage a person could do sitting in the back seat being chauffeured, presumably while staring down at their smart phone to pass the time. The after 2am crowd, on the other hand, poses additional risks but I for one wouldn’t send my car out that late. A sick passenger is one danger, sharing the road with impaired drivers in (gasp!) manual driving mode is another. How do you specify who is eligible for pick up anyway? Imagine the headline “Tesla picks up prison escapee and drives it across the state line.” Add in your fear here (underage runaway, woman in labor, very sweaty marathon runner.)

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Battery expert Jeff Dahn inside the frunk of a red Model S

Battery expert Jeff Dahn inside the frunk of a red Model S [Source: dal.ca]

Availability

This is the main point I’ve heard brought up in my quick chats about this topic. How do you schedule your car to go off and pick people up within a strict window until you need it again? How does traffic play a part? Do you wait until you’re home for the evening and send it out, knowing full well it’ll definitely make it home by the next morning? Or do you risk letting it take a 4pm pickup when doing so could leave you stranded at the office? How far would you let your car go anyway? What about charge? You might need a certain range to get home so can you restrict your car’s pickup jobs to a certain distance? What if it’s cold outside?

In this regard, I have a lot more questions than answers. I have no interest in my car being late to bring me to or from work. It’s my car after all. I have even less interest in being picked up without enough range to get me where I’m going. I live in a major city and I don’t expect to see a Supercharger within our limits any time soon. There are now chargers within 100 miles of me in all major directions, which very easily enables long distance travel as intended. I’m happy with this, as I certainly don’t find myself needing a fast charge close to home. If I plan on letting my car work all day however, that may change. Letting it go home and plug in is impractical at the current rate of my charging setup. 29 miles per hour doesn’t speak well to quick turnaround.

Quick-Tesla-App-3

Cost

All of the questions above can be overlooked for a price. The big question is what that price might be. In my own life, I wouldn’t entertain the idea if it made me $100 per month. If it made me $1,000, I’d be the first in line to sign up. Everyone has a different sensitivity to price but I’d be willing to bet that even the least price sensitive people would at least consider using their Tesla in this way if the resulting income matched or exceeded their car payment. Getting to own and drive what I consider the world’s best car for no monthly payment is an offer that’d be too hard to refuse.

Those were just arbitrary numbers though. What might be realistic? I’d like to think that tomorrow’s Tesla is comparable to today’s Uber Black. My Uber app only gives prices for Uber X but I know that Black costs more. At this very moment, a quick ride from my work place to the very center of our downtown is $12 on Uber X. Let’s estimate that it would be $20 for Black. In fact, let’s assume the average ride would net $20. The car would certainly be smart enough to try to do another pickup on the way back to me so I can probably count on $40 as a “round trip” made during my work day. If I let the car drive two round trips on Friday and Saturday nights as well as one each work day, that bring us up to 9 round trips per week, or $360. Already, this isn’t sounding so bad. Let’s scale that down due to some Tesla profit and market saturation. It still seems very reasonable that with little time commitment, $200 per week is reasonable. We’re at $860 per month. If you, like me, go out into a city once or twice a month yourself and spend anywhere from $10-30 in parking or cab rides, you could be earning/saving a combined $900 each month. I suppose I just learned that yes, I’d probably consider letting my car go out and work for me. Even at half the dollars I’m picturing, a Model 3 payment would be covered.

Convenience

Airports. Nights out drinking. Events out of town that force a one night hotel stay. Finding parking in crowded places. Paying for parking at concert or sports venues. These are some of the most popular reasons people today might use ride sharing services even if they have a car. It would sure be convenient if your own car could handle these occasions for you. This, I know, has more to do with autonomy than making the decision to allow your car to work for you. But it’s only a small leap from one to the other. I say this because if my car dropped me off at an Eagles game, I wouldn’t want it paying for parking while it waits. I’d want it headed back home, because that’s a safe place for it to wait. But if it’s going to driving alone anyway, why not pick someone up? It’ll be an exceptionally convenient life when cars can drive for us.

Tesla-Autopilot-Traffic-Rain

Implementation

How might a program like this actually work? Given a very elementary level of consideration, I imagine the same way Uber works now. I picture a beautiful and streamlined app interface on your smart phone that allows you to log in when you want the car to be able to drive. I imagine the ability to draw a border around the distance you’re willing to let your car travel, as well as the ability to set a time that the car has to return by. Many people far smarter than I will program fantastic algorithms that only allow the car to accept rides that, given traffic and other factors, will get the car back within its allowable time window. I also picture the ability to send the car out with a child’s car seat, if summoned. That would require a bit of interaction, as the app would have to notify you to install it first unless you leave one installed. Speaking of app, I imagine it would notify you that it’s about to head out. (“Mom! I’m going out for a bit. Be back in an hour!”)

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Teslarati-Lifestyle-App

Supercharger map with crowdsourced recommendations from Tesla owners

Challenges

Much like I expect to be challenging for vehicle autonomy in general, the regulatory nightmare that is a driver-less vehicle will be the biggest hurdle to jump, in my humble opinion. Those aforementioned people way smarter than I? They’ll figure out programming the self driving technology sooner than later. They’ve already done a lot. Those perhaps-not-as-smart people we elect to office? Those folks I’m not too confidant in. Well, not them per say. The big jumbled mess of a political system that in the United States and so many other places churns out rules based on the almighty dollar rather than the good of citizens. Right here in my own home town, Uber is technically not legal. It’s legal in the state, just not the city, which has a cluster of a Parking Authority that somehow controls taxis. Except, by the way, when the Democratic National Convention came to town around the same time our local train system was having problems. Then the city made a special exception to “let” Uber operate. (Spoiler alert: it operates anyway.) My point is to illustrate that all the engineering and data in the world won’t guarantee that Tesla will even be allowed to operate driver-less ride sharing services as quickly as the technology itself will be available. That to me, is challenge numero uno.

Quick-Tesla-App-PARZ

The technology itself though, still has a lot of work ahead. Just like any parent tells their teenage driver “It’s not you, it’s the other cars on the road I’m worried about.” A Tesla can be a flawless driver 100% of the time on empty roads and that still won’t even come close to accurately predicting how it will drive when sharing the roads with distracted drivers, well-meaning drivers in poor weather conditions, and anything in between. Temporary lane restrictions are hard to compute, as is seeing a car that you just know is going to make a move without a signal. Years of driving experience allows people to read another car’s “body language” so to speak. Will a car ever be able to do the same?

An extension on the both of the topics above, I can only imagine the bureaucratic and technological nightmare that will result if (when!) cars have to learn to talk to each other. Surely that’s where we are headed. It’d be safer that way. But can you see BMW, who I suspect is a little hurt right now, cooperating with Tesla? I can’t but I hope they’ll have no choice. Step up or step aside.

Production vs. demand is another potential challenge. If the ability to buy a car and have it work for you to the tune of effectively negating your payment arrives sooner than Tesla exponentially increases its output of cars, we’ll have a problem. Maybe I’m biased, but I assume a darn lot of people would jump at the chance of driving a car that pays for itself. I mean, I wasn’t wrong when I called myself crazy for assuming there would be 50-100,000 people would put in reservations for a Model 3. Well, I was wrong, but in the right direction.

What do you envision ride-sharing capability looking like? What challenges will it face? Drop me a comment.

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Tesla Cybercab spotted testing on public roads for the first time

The car was spotted just minutes from Tesla’s Engineering Headquarters in Los Altos, California. There are a few interesting tidbits we can gather from the photo and the information shared with it.

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Credit: Teslarati

The Tesla Cybercab has been spotted testing on public roads for the first time, marking a substantial step forward in the vehicle’s development.

The car was spotted just minutes from Tesla’s Engineering Headquarters in Los Altos, California. There are a few interesting tidbits we can gather from the photo and the information shared with it:

The vehicle had a driver and side view mirrors equipped on it, which seems to be pretty expected, especially at this stage.

Tesla might have been using its Full Self-Driving software with the vehicle as it enters this new stage of testing on public roads. This seems most likely, especially as the car, which has long been developed to be void of a steering wheel and pedals, will totally rely on autonomous tech to transport one or two passengers to their destination.

Additionally, side view mirrors are required by law at delivery, and Tesla was likely looking to keep things as safe and elementary as possible, especially with this early stage of testing.

As this is the first time the vehicle has been spotted on public roads and the first time it was likely testing on them, Tesla was being cautious.

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There have been a lot of developments with Cybercab over the past few weeks, as the car has been spotted testing on the Fremont Factory’s test track, units have been seen outside of Gigafactory Texas’s crash testing facility, and there has been some additional speculation about what the vehicle’s standard equipment will be.

There have also been quite a few job postings by Tesla for manufacturing and production roles related to Cybercab over the past few weeks.

Yesterday, Tesla’s Board Chair, Robyn Denholm, revealed that the company could end up building Cybercab with a steering wheel and pedals, contrary to what Tesla and CEO Elon Musk have wanted to do.

Tesla Cybercab might be getting a huge change

The vehicle has yet to reach that stage of regulatory testing, but Tesla wants to start volume production in Q2. If it wants to release the vehicle without any manual controls, that means that Full Self-Driving will need to be completed within the next eight months.

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Tesla hints it could see ‘a few more vehicles’ released soon

Denholm said on CNBC yesterday that “we do have a few other vehicles coming out.”

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Tesla Board Chair Robyn Denholm hinted the company could see “a few more vehicles” coming out and being released soon, although there is no indication of what could be on the way based on her comments.

However, Tesla has hinted toward several potential releases in the coming years, as other executives, including Chief Designer Franz von Holzhausen, have talked briefly about what could be on the way.

Denholm said on CNBC yesterday that “we do have a few other vehicles coming out.”

It was a vague and almost cryptic sentence, as, in all honesty, it was not completely clear whether she was talking about recent releases that are just making their way to market, like the Model 3 and Model Y “Standard,” or new vehicles altogether.

Nevertheless, it’s worth dissecting.

Tesla “Standard” Models

On October 7, Tesla launched the Standard Model 3 and Model Y, stripped-down versions of their now “Premium” siblings. The Standard trims lack premium features like leather seats, a rear touchscreen, and a glass roof, among other features.

Tesla begins deliveries of its affordable Model Y Standard

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These cars are just starting to be delivered for the first time, so it is possible that Denholm was referring to these cars.

Potential Model 2 Hint?

There has always been a looming vehicle model that many Tesla fans and owners have been intrigued by: the Model 2.

This car was hinted at being the $25,000 model that Tesla was rumored to be developing, and many thought that was the vehicle that would be released earlier this month, not the Standard Model 3 and Model Y.

Instead, the Model 2 could be something that would enable Tesla to reach an entirely new consumer base, including those who are not able to swing the payment for the company’s more premium offerings.

It seems Tesla will have to launch some sort of extremely affordable model in the future, and with the Cybercab being slotted at that rough price point, it would not be out of the question for it to be in the realm of possibility for future releases.

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It’s worth noting, however, that it is probably unlikely this will happen. Tesla is so deadset focused on autonomy, it seems Cybercab would take extreme precedence over the unconfirmed “Model 2.”

Cybertruck-inspired SUV

Tesla fans have been begging the company to develop a full-size SUV that would compete with the Ford Expedition or Chevrolet Tahoe, but the company has not given any indication that this would be something it would build.

Nevertheless, there was a very subtle hint in a recent promotional clip that showed a Cyber SUV mock-up placed strategically next to a clay model of a Model 3:

Tesla appears to be mulling a Cyber SUV design

The Model X is simply not what people want when it comes to an SUV, as it does not have the seating capacity and cargo space that many need with a full-sized SUV.

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This issue, in particular, has been one that has been extremely relevant to the company’s future lineup as consumers have shown they would be interested in a Tesla vehicle that fit this description.

Additionally, von Holzhausen said in September that a Cyber SUV or a smaller electric pickup with a more traditional design is “definitely things we’ve considered…We’re working on so many innovative and fun things.”

Tesla gives big hint that it will build Cyber SUV, smaller Cybertruck

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Investor's Corner

Tesla enters new stability phase, firm upgrades and adjusts outlook

Dmitriy Pozdnyakov of Freedom Capital upgraded his outlook on Tesla shares from “Sell” to “Hold” on Wednesday, and increased the price target from $338 to $406.

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Credit: Tesla China

Tesla is entering a new phase of stability in terms of vehicle deliveries, one firm wrote in a new note during the final week of October, backing its position with an upgrade and price target increase on the stock.

Dmitriy Pozdnyakov of Freedom Capital upgraded his outlook on Tesla shares from “Sell” to “Hold” on Wednesday, and increased the price target from $338 to $406.

While most firms are interested in highlighting Tesla’s future growth, which will be catalyzed mostly by the advent of self-driving vehicles, autonomy, and the company’s all-in mentality on AI and robotics, Pozdnyakov is solely focusing on vehicle deliveries.

The analyst wrote in a note to investors that he believes Tesla’s updated vehicle lineup, which includes its new affordable “Standard” trims of the Model 3 and Model Y, is going to stabilize the company’s delivery volumes and return the company to annual growth.

Tesla launches two new affordable models with ‘Standard’ Model 3, Y offerings

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Tesla launched the new affordable Model 3 and Model Y “Standard” trims on October 7, which introduced two stripped-down, less premium versions of the all-electric sedan and crossover.

They are both priced at under $40,000, with the Model 3 at $37,990 and the Model Y at $39,990, and while these prices may not necessarily be what consumers were expecting, they are well under what Kelley Blue Book said was the average new car transaction price for September, which swelled above $50,000.

Despite the rollout of these two new models, it is interesting to hear that a Wall Street firm would think that Tesla is going to return to more stable delivery figures and potentially enter a new growth phase.

Many Wall Street firms have been more focused on AI, Robotics, and Tesla’s self-driving project, which are the more prevalent things that will drive investor growth over the next few years.

Wedbush’s Dan Ives, for example, tends to focus on the company’s prowess in AI and self-driving. However, he did touch on vehicle deliveries in the coming years in a recent note.

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Ives said in a note on October 2:

“While EV demand is expected to fall with the EV tax credit expiration, this was a great bounce-back quarter for TSLA to lay the groundwork for deliveries moving forward, but there is still work to do to gain further ground from a delivery perspective.”

Tesla has some things to figure out before it can truly consider guaranteed stability from a delivery standpoint. Initially, the next two quarters will be a crucial way to determine demand without the $7,500 EV tax credit. It will also begin to figure out if its new affordable models are attractive enough at their current price point to win over consumers.

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