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Who will forego owning a car when Tesla’s ride-sharing service becomes available?

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Picture this: no car payment, no car insurance, no circling the block looking for parking and no depreciation. Foregoing car ownership sounds pretty great. Why is it then that so many Americans insist on having a car? Simply stated: freedom.

Somewhere after the years of public transit, biking many miles or begging your parents for a ride, most of us got our own set of wheels. For some of us, it came in the form of a $900 death trap of a car that shook violently above 55 miles per hour. For others, an uncool but reliable toaster of a car. The car world as we have known it has always meant that unless you live and work in a major city with great public transportation, a personally owned vehicle is about the only convenient way to travel from point A to point B on a regular basis. This is especially true for families. If you’ve never been on a bus or subway with a baby in a stroller, spare yourself the circus. It’s also true depending on exactly which neighborhood you live in, even if you are in a major city. Taxicabs, where available, are far more convenient than public transportation, but certainly aren’t widely available outside of the most densely populated metro areas and at least to me, have always been cost prohibitive to use for any more than a special occasion. To reiterate the point, we all like freedom. And convenience. We like to go where we want to when we want to, without standing on a bus or watching a train timetable.

Uber-logo-driver

Ride-sharing services such as Lyft and Uber have upended the traditional taxicab model and, in many markets, undercut the price while providing a superior service. I certainly enjoyed riding in a flawlessly clean Kia Optima Hybrid Saturday night with a chatty and friendly driver far more than the high mileage, stale smelling, yellow Crown Vics that pass as taxis in Philly. The before and after experience are far better as well. Smart phone apps tell you who will be picking you up, in which kind of car, and exactly how far away they are. Cabs still require being flagged down and the joke’s on you when the 5th one passes you by with the “vacant” indicator light in use but passengers in the rear. Afterwards, you get notified that your credit card was charged in some amount that you had already been prepared for. In a taxi, you either pull out cash when you see the ever-surprising sum due or watch the driver give you an attitude for using their in-car credit card machine.

Trends are already developing among young adults to move into thriving urban areas, work nearby and pass up owning their own wheels. A lot of reasons contribute but the ease of using ride-sharing services is certainly one of them. What I’d like to explore here is whether or not this trend will grow – both among young adults as well as others – as autonomous vehicles come to market and bring with them the possibility that ride-sharing services will be even more common and affordable. I offer below a few categories of people and my assessment on whether or not they may give up a car in favor of autonomous vehicle ride-sharing.

TARGET: YOUNG, SINGLE, URBAN DWELLER. ANSWER: YES.

These folks are already the group that are giving up cars today, so surely they’ll continue to do so when that option becomes cheaper and even more widely available.

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TARGET: YOUNG, SINGLE, ANYWHERE ELSE DWELLER; ANSWER: PROBABLY.

These folks will share many of attributes of those who forego car ownership today. They will, on average, have student loan debt to tackle and plenty of familiarity with smart phones.

TARGET: TWO ADULT HOUSEHOLD WITH NO KIDS. ANSWER: MAYBE.

This group of folks may be willing to forego one car in the household. Depending on their age and familiarity with today’s ride-sharing offerings, they could be the perfect target to give up one car. This demographic is the one I belong to. Having jobs in opposite directions makes owning two cars the most convenient option, but outside of the work commute, the second car never moves.

TARGET: TWO PARENT FAMILY. ANSWER: PROBABLY NOT.

Children are required to ride in car seats for quite a few years these days. For that reason alone, I would imagine ride-sharing to be more trouble than it’s worth. If, like the two-adult household with no kids one car is solely used as a commuter, that one could probably be given up. But the way I understand today’s modern family to work, either parent has to be ready to spring into action with little notice if daycare gets shut down due to snow or Junior gets sick in school.

TARGET: MATURE ADULTS. ANSWER: HOPEFULLY.

This is where I’d really like to see ride-sharing take off. If you are fortunate enough to make it to old age, your eyes or reflexes may not join you in their youthful form. The mature adults I’ve been close with have all wanted to continue driving beyond the point that in their individual circumstances, was probably wise. I get it. Freedom. When you’re a feisty octogenarian with an old habit of going to the grocery store daily (a holdover for the decades when you hid your smoking habit from everyone) it must be impossible to imagine yourself sans keys. If we can invent these cars, surely we can also invent easy ways of calling one up for a customer who isn’t particularly interested in owning or operating a smart device. (A telephone dialing service, perhaps – especially helpful for those with vision problems.)

AS FOR ME?

I just got done telling my better half that due to his short commute and our never using our second car outside of the work day, we could easily ditch car number two and have him Uber to work. The conversation was short-lived, as I have the longer commute and he has no interest in handing over the Model S fob to me on a permanent basis. In theory though, might it work? Yes. Would I end up doing it? Probably no. I’d be more inclined to owning an autonomous Tesla and letting it work for me such that the overall cost of owning and operating it was comparable to using a ride-sharing service in place of owning one.

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The why is simple: freedom.

"I'm Electric Jen

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Investor's Corner

Tesla stock closes at all-time high on heels of Robotaxi progress

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Credit: Tesla

Tesla stock (NASDAQ: TSLA) closed at an all-time high on Tuesday, jumping over 3 percent during the day and finishing at $489.88.

The price beats the previous record close, which was $479.86.

Shares have had a crazy year, dipping more than 40 percent from the start of the year. The stock then started to recover once again around late April, when its price started to climb back up from the low $200 level.

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This week, Tesla started to climb toward its highest levels ever, as it was revealed on Sunday that the company was testing driverless Robotaxis in Austin. The spike in value pushed the company’s valuation to $1.63 trillion.

Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing

It is the seventh-most valuable company on the market currently, trailing Nvidia, Apple, Alphabet (Google), Microsoft, Amazon, and Meta.

Shares closed up $14.57 today, up over 3 percent.

The stock has gone through a lot this year, as previously mentioned. Shares tumbled in Q1 due to CEO Elon Musk’s involvement with the Department of Government Efficiency (DOGE), which pulled his attention away from his companies and left a major overhang on their valuations.

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However, things started to rebound halfway through the year, and as the government started to phase out the $7,500 tax credit, demand spiked as consumers tried to take advantage of it.

Q3 deliveries were the highest in company history, and Tesla responded to the loss of the tax credit with the launch of the Model 3 and Model Y Standard.

Additionally, analysts have announced high expectations this week for the company on Wall Street as Robotaxi continues to be the focus. With autonomy within Tesla’s sights, things are moving in the direction of Robotaxi being a major catalyst for growth on the Street in the coming year.

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Tesla needs to come through on this one Robotaxi metric, analyst says

“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”

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Tesla needs to come through on this one Robotaxi metric, Mark Delaney of Goldman Sachs says.

Tesla is in the process of rolling out its Robotaxi platform to areas outside of Austin and the California Bay Area. It has plans to launch in five additional cities, including Houston, Dallas, Miami, Las Vegas, and Phoenix.

However, the company’s expansion is not what the focus needs to be, according to Delaney. It’s the speed of deployment.

The analyst said:

“We think the key focus from here will be how fast Tesla can scale driverless operations (including if Tesla’s approach to software/hardware allows it to scale significantly faster than competitors, as the company has argued), and on profitability.”

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Profitability will come as the Robotaxi fleet expands. Making that money will be dependent on when Tesla can initiate rides in more areas, giving more customers access to the program.

There are some additional things that the company needs to make happen ahead of the major Robotaxi expansion, one of those things is launching driverless rides in Austin, the first city in which it launched the program.

This week, Tesla started testing driverless Robotaxi rides in Austin, as two different Model Y units were spotted with no occupants, a huge step in the company’s plans for the ride-sharing platform.

Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing

CEO Elon Musk has been hoping to remove Safety Monitors from Robotaxis in Austin for several months, first mentioning the plan to have them out by the end of 2025 in September. He confirmed on Sunday that Tesla had officially removed vehicle occupants and started testing truly unsupervised rides.

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Although Safety Monitors in Austin have been sitting in the passenger’s seat, they have still had the ability to override things in case of an emergency. After all, the ultimate goal was safety and avoiding any accidents or injuries.

Goldman Sachs reiterated its ‘Neutral’ rating and its $400 price target. Delaney said, “Tesla is making progress with its autonomous technology,” and recent developments make it evident that this is true.

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Investor's Corner

Tesla gets bold Robotaxi prediction from Wall Street firm

Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.

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Credit: Tesla

Tesla (NASDAQ: TSLA) received a bold Robotaxi prediction from Morgan Stanley, which anticipates a dramatic increase in the size of the company’s autonomous ride-hailing suite in the coming years.

Last week, Andrew Percoco took over Tesla analysis for Morgan Stanley from Adam Jonas, who covered the stock for years. Percoco seems to be less optimistic and bullish on Tesla shares, while still being fair and balanced in his analysis.

Percoco dug into the Robotaxi fleet and its expansion in the coming years in his latest note, released on Tuesday. The firm expects Tesla to increase the Robotaxi fleet size to 1,000 vehicles in 2026. However, that’s small-scale compared to what they expect from Tesla in a decade.

Tesla expands Robotaxi app access once again, this time on a global scale

By 2035, Morgan Stanley believes there will be one million Robotaxis on the road across multiple cities, a major jump and a considerable fleet size. We assume this means the fleet of vehicles Tesla will operate internally, and not including passenger-owned vehicles that could be added through software updates.

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He also listed three specific catalysts that investors should pay attention to, as these will represent the company being on track to achieve its Robotaxi dreams:

  1. Opening Robotaxi to the public without a Safety Monitor. Timing is unclear, but it appears that Tesla is getting closer by the day.
  2. Improvement in safety metrics without the Safety Monitor. Tesla’s ability to improve its safety metrics as it scales miles driven without the Safety Monitor is imperative as it looks to scale in new states and cities in 2026.
  3. Cybercab start of production, targeted for April 2026. Tesla’s Cybercab is a purpose-built vehicle (no steering wheel or pedals, only two seats) that is expected to be produced through its state-of-the-art unboxed manufacturing process, offering further cost reductions and thus accelerating adoption over time.

Robotaxi stands to be one of Tesla’s most significant revenue contributors, especially as the company plans to continue expanding its ride-hailing service across the world in the coming years.

Its current deployment strategy is controlled and conservative to avoid any drastic and potentially program-ruining incidents.

So far, the program, which is active in Austin and the California Bay Area, has been widely successful.

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