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- Hacker News
- I see this as liability shifting exercise first, scalability tool second, and Elon's desire to deliver on his 2016 promise third.
The scalability point is compound. We are talking charging, storage, and cleaning infra as well as regulatory burdens. Scaling that is hard and local, so it does make sense to outsource that. I believe the deal is really raw because of the risks involved, but Elon does have a decent track record of delivering on investment. Some of these entities will be able to perform regulatory capture and become a decent cash cow.
- The franchising itself isn’t the problem - it’s a valid way for a company to scale up a service.
The issue is that they’re rolling it out before Tesla’s self-driving software has been proven to be safe. And there are questions about whether a vehicle without a steering wheel or side mirrors is actually road-legal.
Additionally, I’m not sure what kind of checks Tesla is doing for the franchisees. Will they let them roll out a service anywhere they like, irrespective of whether FSD is optimized for those road conditions? Based on the way they’ve approached FSD with consumers, my guess would be yes.
by dabinat - Except they are not "rolling it out".
What exists is a web page where you can express an interest in that offering.
But you can't buy a cybercab today.
This whole article is much ado about nothing.
Tesla has a page to gauge interest in something they might offer at some point in the future.
That's it. That's all there is to it.
by kjksf - You’re all missing the fact that having local fleet operators who don’t belong to Tesla is a politically savvy move against nyc-style “saving jobs by killing 40k/yr” people.by iknowstuff
- Amazon subcontracts their delivery services, so there are probably additional factors driving Teslas decision.
My guess is the insane liability a car accident can create. Trucking companies have had to pay out millions, even for accidents where they weren’t at fault.
- I would bet that if self driving software was involved in any accident, it is the company who developed the software who will be paying, even if someone else owns the car.
- I wonder if the best analogy here is Amazon.
They allow 3rd party sellers in their platform and in their warehouses
There's many reasons for this but they include:
Somebody will compete in every segment: building the taxis, operating them, and vertically integrating them. Put another way - some people will buy taxis in this model either way, so Tesla is incentivized to participate in this also. That helps them get economies of scale.
It also of course minimize risk. But not just the obvious kind. It also minimises risk of a niche competitor taking the buy to own robotaxi market and from that wedge becoming a substantial competitor.
But also like Amazon - operators should worry about Tesla taking the data they have about most successful routes and using that to compete directly in the must lucrative identified markets.
- What an absurd lack of nuance.
Let’s consider the only major example of the alternative: Waymo. Waymo is expanding rather slowly, and I imagine there are several factors. Building the cars is capital intensive. Adding a new market requires some regulatory work, and it also requires acquiring and building a lot for the cars to park at and charge at. And hiring people to charge them. (The labor cost is a drop in the bucket — there is no reason to put serious effort into automating this.)
Perhaps Tesla wants to focus on its actual strength: building the cars. And perhaps they want to outsource the regulatory issues and the problems when all the cars get stuck in the same power outage, etc.
(I’m charitably assuming here that Tesla can actually build a viable robotaxi.)
by amluto - There are also supply chain constraints which prevent Waymo's vehicle suppliers from rapidly scaling up production.by nradov
- Vertical and integration like that has been very commonly and often tried in lots of different industries. Sometimes it works out, sometimes it doesn't. In the case of Tesla the work required to make a car and the work required to make a self-driving car are very similar. However, the work required to run a taxi company has very little to do with the labor required for use of the buffs. Thus, for Tesla and most car companies it is best to say I'm going to do what I do best and let someone else deal with that other hard part. It just loses too much focus to try and vertically
Taxis are a tiny niche in the transport market. They're certainly very profitable for the small number of people who run the companies, but they're a tiny niche and they will always be that way. There are too many advantages to owning your own personal automobile when you drive a lot. In turn, people who are driving their own automobile vehicle are the target of all car companies, taxies are an important niche but that is not enough to make a successful car company.
by bluGill - you could make this same argument about any business and any mechanism that raises outside capital to expand.
If McDonald’s restaurants were profitable, they wouldn’t sell franchises. Except it’s been an incredibly successful way to raise capital and expand, for both franchisees and McDonalds.
If company about to IPO were a great investment, they wouldn’t IPO. Except the stock market has been an incredible mechanism for company and capital growth.
by gricardo99 - people r tryin' to equate this to a franchise model, some the amazon 3rd party model.
nope - this is just Elon raising money without going to the stock market or government but directly to Elon worshipping idiots.
he benefits two ways - interest free Capex, then higher stock prices by reporting higher number of cybercabs on the road. & guess who takes a punch to the mouth - the Elon worshippers.
with the amazon model | franchise models there's shared risk - not exactly equal but shared risk.
with Elon - one person is eating the risk, while one person eats 90% of the gains.
by dzonga - Bit of a weird world where we don't have self-driving cars but we did manage to automate the writing of articles lamenting that fact.
- Headfaked by Moravec's Paradox.by akkartik
- The author misses the difference between cashflow and profit entirely.
Selling a car today gives Tesla the full profits of that hardware production today. Running that car as a robotaxi means that Tesla eats the costs of the hardware today in exchange for a larger total profit collected over several years.
So operating a fleet gives the company access to more long-term profits at the cost of decreasing the bank balance today (negative cash flow), where selling the cars lets the company fill the bank account right now (positive cash flow) at the cost of limiting long-term profitability.
The decision to prioritize immediate cash flow vs long term profits depends on the financial position and overall strategy of the company.
by riknos314 - Tesla is not eating the cost of anything, they want to have their cake and eat it too. this will go as well for them as bunch of other things in recent years but just maybe this time people will realize they have been getting scammed for decade+by bdangubic
- Tesla can do both. There will undoubtedly be a fee to join and use the Tesla ridesharing platform - I would expect that every Cybercab sold to require, at the minimum, the monthly $100 FSD subscription. On top of that, Tesla would take a cut off of all rides that cannot be negotiated.
Any franchisee contract would also need to have some sort of rules that prevent Tesla from running their own taxis themselves and undercutting their business, if it turns out to be too successful.
by jerlam - If McDonald's was profitable, they wouldn't try to franchise it.
That's what this is. You take on operating costs and you understand your local market. They own the brand.
by fieryscribe - actually most franchise restaurants are not profitable and eventually go out of business. subway is famous for being basically a pyramid scheme that only makes money by fleecing aspiring restaurateurs. mcdonald's is an exception because they are primarily a real estate company and commercial landlord.
- It's more than that, Tesla owns the brand, the manufacturing, and the software.
They are much more than McDonalds.
But indeed your comparison is an apt way to reply to this "article".
- The key thing here is liability. A McDonald’s franchisee is protected if the thing that makes someone sick was a result of bad food supplied by the McDonalds corporation. In the case of Tesla, irrespective of the self driving software the Tesla corporation provides, the “franchisee” is always the one liable.by dyauspitr
- Companies have to convince potential franchisees that they will be successful. Usually, the franchiser needs to already be wildly successful and have a playbook of how the franchisee will also be successful and how the franchiser will protect them, often via regional exclusivity.
I don't know if Tesla has proven that their own fleet is successful.
by jerlam - One problem in your analogy, for McDonalds, the franchisee is the one who actually operates the business.
For the Cybercab, Tesla is the one operating it via "Full Self Driving", their app, and the Tesla rideshare network. As the owner, the only thing you do is own it, insure it, have a place to park it, and take on the risk of what happens if the vehicle registered to you is in an accident. Clearly, a pretty one-sided assignment of risk.
by pseudosavant