Will robotaxis become mainstream and if so who will win the race?, Mike Daly

The main theme of this article in the FT is a warning to investors.

“Despite recent declines, Tesla shares trade at 80 times forward earnings — a steep premium to global peers. That reflects hopes that its heavy AI spending will make it a key beneficiary of a shift to fully self-driving cars and that the transformation will arrive fairly quickly. But the pay-off is likely to take much longer than expected, with the beneficiaries spread out over a wide range of industries and companies.”

FT Inside Business 15th October, 2024

The recent Tesla robotaxi unveiling event in LA may have underwhelmed investors but is that fair? Witnessing SpaceX's success in retrieving a rocket booster from outer space demonstrates Elon Musk's creative thinking, determination to succeed with more viable business models, and ability to leverage technology to solve real problems.

Compared to the hype of LLMs, GenAI, and AgenticAI, you could say that Musk has his feet planted firmly on the ground, still bringing dreams to reality.

But the competition will be strong.

Traditional vehicle OEMs will find it hard to transition from internal combustion engine-powered autos, trucks, and vans, while Tesla, Baidu, BDY, and other Chinese manufacturers are focused just on EVs and self-driving vehicles and the whole ecosystem to deliver these.

Hyundai, Renault, and Nissan have all partnered with Waymo for the software so they can focus on manufacturing, distribution, and service.

Foxconn, the world’s largest contract assembler for Apple, has set up a platform to make tailor-made EVs on contract, offering autonomous driving modifications. Foxconn already supplies parts to EV makers including Tesla and makes EV car parts such as camera modules, electronic control units, and sensors at high volumes. Its scale means stable, low-cost parts procurement for clients.

That will help bring the cost of EVs down but will it speed up the economic viability of robotaxis?

“The cost of the self-driving vehicles themselves—around $150,000 apiece for Waymo—also remains a problem. Around two-thirds of that is estimated to come from hardware. To operate their vehicles autonomously, Waymo and others are relying on a battery of expensive sensors including cameras, radars and lidars, which use lasers to create a 3D image of the vehicle’s surroundings, as well as oodles of in-car computing power to make sense of all the data.

Tesla is betting it can make a cheaper option work. Its “full-self driving” system, which will be the underlying tech for its robotaxis, relies only on cameras to collect information. Data from these will go into an “end-to-end neural network”—an algorithmic black box trained on 9bn miles of driving data from the 6m Teslas already on the road—to produce driving commands. As a result, Tesla says its robotaxis will cost under $30,000 and will be easier to transfer from one city to another.

Even if Tesla can make the technology work, it will still need to convince regulators of its approach.”

The Economist ‘The trouble with Elon Musk’s robotaxi dream’ Oct 13th 2024

In parallel the electricity grids across nations need to be upgraded with battery storage to balance out days of high and low demand when wind and solar power generation continues unabated. Drivers need to change their mindsets to consuming mobility when required rather than having vehicles idle on their drives.

Governments must legislate for innovation whilst also ensuring safety across the road network for passengers and pedestrians.

This will all happen and many currently successful enterprises will be disrupted. Over a longer period than Musk hopes but maybe sooner than pessimists say.

Insurers should factor this into their longer-term vision, strategy, product development, and partnerships.