Brett Winton

Re-threaded this line of thought because I mangled it the first time around. tldr Tesla vertically integrating through ride-share could pull forward the service-revenue opportunity, increase odds of success in RoboTaxi and meaningfully boost the financial model.https://twitter.com/wintonARK/status/1223399033856614401 …

In effect Tesla could potential generate RoboTaxi-type economics as a tactical and strategic bridge to get to the actual operational RoboTaxi capability. Service layer economics could begin to feed into the financial model sooner. The future may come faster than we think. 30/

In any market that they seek to penetrate they would likely target half of current ride-share driver new car sales. The entire initiative would, of course, be execution-intensive and require Tesla to take on new capabilities and core competencies. 28/

Is any of this practical or possible? As I think about it: yes. Maybe inevitable even. To penetrate Nevada (40k uber/lyft drivers) Tesla would probably need to get 10k vehicles/drivers in-market. SF would require 15k. LA would require 30k. 27/

That Elon Musk can convince 20,000 to buy a not-a-Flamethrower from the Boring Company certainly implies that he could convince some subset of Uber/Lyft riders to download one additional app in hopes of spurring a more sustainable future. 26/

As to how to catalyze the demand side of the marketplace, seems credible that Tesla could in part rely upon its rabid fans. Many who cheer on Tesla don't yet own one, and many who do still rely on Uber or Lyft. 25/

Tesla also has the ability to concentrate supply as vehicles come off lease and are put back to the company; the Model 3 leases dictate that this occur. This used supply could substantially improve the economics to any prospective drivers. 24/

The pitch to current Uber drivers: same take-home pay but you're paying off a Tesla instead of a Prius (and the driving is less stressful due to the integrated big-screen and FSD and some customer segmentation towards higher price-point riders). 23/

The end-product may be something like a lease+insurance with payments that automatically extract out of ride-share income at some discount to what you would pay if you elect not to drive ride-share miles. (Available in certain geographies.) 22/

The company's best pathway be which to seed its ride-share market is likely to integrate through the financing function. Automakers have a long history of financing their customers: Tesla can modernize that process. 21/

In order to bootstrap Tesla will need to figure out a way to geographically concentrate car supply into the hands of prospective ride-share drivers. The current venn diagram between Tesla owners and prospective ride-share drivers is probably the infinity symbol. 20/

So ride-sharing for Tesla makes strategic and tactical sense, they should have a cost and price advantage, what could possibly go wrong?!? [Looks around the room expectantly, waiting for a flood of current Tesla owners to volunteer themselves as full-time taxi drivers...] 19/

(This is the disaster-scenario for Uber/Lyft: the service layer they're trying to abacadabra into profitability becomes a strategic customer-acquisition channel for an aggressive, technologically savvy mobility provider playing an orthogonal game.) 18/

Given the strategic rationale behind a Tesla-exclusive ride-share network, and that the company would still capture profit in the vehicle sale, Tesla could price the service at cost, or at corporate average gross margin (undercutting Uber/Lyft) 17/

It's also likely that passengers would pay a premium for a Tesla ride-share. Uber Select prices at a ~2x premium to UberX and even those vehicles are sometimes "Select" in-name-only) Consistent with its brand Tesla could provide ride-share riders with a mass-luxury product 16/

From the driver's perspective if purchasing (rather than leasing) the vehicle and if Tesla does deliver on robotaxi capability, then the ride-share driver ends up having financed the purchase of a modern-day taxi medallion via his/her own sweat equity. 15/

Note that insurance eats an obscene percentage of Uber's COGs--roughly half. Delivering passengers safely can make for a very good business. And there is a *lot* of reason to believe that the marginal rider/driver combo in a Tesla would be safer than the same in an Uber. 14/