Uber CEO snubs Elon Musk’s vision of a $30,000 payday for Tesla owners who rent out their cars as self-driving taxis
Dara Khosrowshahi isn’t confident Tesla owners will want to rent their cars out to a “complete stranger.”
Around the time Tesla CEO Elon Musk was asking investors to reapprove his $56 billion pay package, the company also announced that it would launch its long-awaited autonomous vehicle rideshare service Robotaxi on August 8. That launch never happened.
Instead, Tesla ended up postponing its planned Robotaxi unveiling until October to build more prototypes. The vision for Robotaxis is current Tesla owners will essentially rent out autonomous self-driving vehicles to ride-share customers, and Musk has claimed Tesla owners can earn up to $30,000 per year by doing so. In a LinkedIn video posted by Rosalie Nathans, whose profile says she’s a senior manager for used cars and online sales at Tesla, she hailed a Robotaxi on her phone and could adjust the car’s temperature, music, as well as pick-up and drop-off locations all without someone in the driver seat.
But Tesla’s work on Robotaxis may be for naught—at least according to Uber CEO Dara Khosrowshahi, who said he doubts the electric vehicle giant will have enough taxis to meet peak demand.
“Probably the times at which you’re going to want your Tesla are probably going to be the same times that ridership is going to be at a peak,” Khosrowshahi said during an interview on The Logan Bartlett Show podcast released on Friday. “There are these peaks and valleys in terms of supply and demand.”
About Tesla’s Robotaxi plan
Musk’s big vision for the Robotaxi stands on the premise that Tesla owners will want to rent out their vehicles when they’re not in use. That might be nice for folks looking to make a little extra income on their Tesla that’s just sitting in the garage during the day, but the average Tesla owner is considerably well off.
Indeed, Tesla owners, on average, make about $150,000 per year or more, about twice as much as the median household income in the U.S., according to a study by automotive digital marketing agency Hedges & Co. Other autonomous vehicle companies are also skeptical about Musk’s rideshare plan for Teslas.
“It’s not viable,” Edwin Olson, CEO and co-founder of autonomous driving tech company May Mobility, told Fortune. “Individual car owners don’t want to be ‘landlords’ of their car. Riders are often hard on cars—they treat them poorly, make messes, slam doors—all because the vehicle is not theirs. This could deter owners from participating.” May Mobility insists his company’s services aren’t “robotaxi”, but instead partners with businesses and governments to provide specific autonomous driving routes.
Khosrowshahi also isn’t confident about the premise that Tesla owners would willingly rent out their cars.
“It’s also not clear to me that the average Tesla owner or owner of any other car, is going to want to have that car be ridden in by a complete stranger,” he said during the podcast.
Nevertheless, Robotaxis also promise to add another rideshare option for consumers—but they’re going to have to wait even longer for its launch. There’s also a theory that Tesla announced its Robotaxi back in the spring to serve as “a shiny object to distract from Tesla’s declining sales,” according to Bloomberg. If true, it worked. During an 11-week stretch starting in April, Tesla added $386 billion in market capitalization, Bloomberg reported.
What’s more, Khosrowshahi is also convinced Robotaxis aren’t ready yet since maintaining a rideshare fleet is a “very different business” from selling cars, he said on the podcast. In other words, building a $50,000 piece of hardware to make autonomous driving work is completely different from driving more than 30 million transactions every day. And unlike Uber, Tesla isn’t equipped to handle the customer service aspect of operating a rideshare company, Khosrowshahi said.
There are a lot of things that can go wrong in a rideshare—like people wanting to pay cash, accidents, and people getting sick or losing items, Khosrowshahi said during the podcast.
“We’ve had to learn to build out a system that’s able to make everything work for both the rider and the driver,” Khosrowshahi said. “It’s taken us 15 years. It’s taken us tens of billions of dollars of capital.”
Still, Khosrowshahi sees potential in Robotaxi, and doesn’t think of it as a “zero-sum game.” In fact, he said during the podcast “hopefully Tesla will be one of [Uber’s partners]” one day.
Olson also sees the idea of a Robotaxi as more effective if Tesla were to instead dedicate a fleet of autonomous vehicles to the platform. Fleets can be optimized for specific purposes, offer streamlined services—and they’re just easier to manage, he said.
“This approach is likely to result in a better service to consumers than ‘some random guy’s Tesla showing up,’” Olson said.
