Tesla Inc.’s calling used to be bringing affordable electric cars to the masses. Elon Musk is now ripping up the script, vowing to pair self-driving technology with a sharing service that will make it crazy for consumers to buy other cars.
The chief executive officer said that by the middle of next year, 1 million Teslas will be on the road that are fully capable of driving themselves. During an hours-long investor day presentation focused on autonomy, Musk said customers will be able to put their cars onto a shared network of robotaxis, which will be able to get around without a human inside.
Even for Musk, 47, who’s never shied away from outlandish predictions, the timeline is hugely ambitious. Alphabet Inc.’s Waymo, widely thought to be a leader in the autonomous space, has shied away from letting its autonomous vehicles roam without safety drivers. But with Tesla facing mounting concerns about demand for its electric cars, the CEO said both the company and its customers will reap major monetary benefits once self-driving robotaxis are ready for prime time.
“The fundamental message that consumers should be taking today is that it’s financially insane to buy anything other than a Tesla," Musk said Monday at Tesla’s headquarters in Palo Alto, California. “It will be like owning a horse in three years."
Cash Impact
The catch for Tesla investors is that all this is going to be costly in the near term. When asked how much autonomous technology is costing Tesla, Musk responded: “It’s basically our entire expense structure."
Whereas Tesla has said in the past that it expects to be cash-flow positive in every quarter beyond the first three months of this year, Musk now says the goal is to be cash-flow neutral while it’s building up a fleet of self-driving vehicles that will make their way into the robotaxi service.
“Between now and when the robotaxis are fully deployed throughout the world, the sensible thing for us is to maximize the number of autonomous units made and drive the company toward cash-flow neutral," Musk said. “Once the robotaxi fleet is active, I would expect to be extremely cash-flow positive."
Tesla shares ended the day down 3.8 percent at $262.75. While they briefly rose as much as 0.4 percent in late trading, they ended the post-market session little changed. The stock has declined 21 percent this year.