Mindreading Elon Musk
From Martha Hindes
Senior Editor Michigan Bureau
The Auto Channel
The Bleeding Edge With Jeff Brown - We just uncovered Tesla’s master plan…
Tesla’s Autopilot source code tells us what the company is planning…
One of the best ways to determine a tech company’s next move is to look at the code in its software updates. That’s how we learned of Apple’s augmented reality (AR) ambitions before they were announced.
This kind of information can provide investors an edge. It is a lens on future business strategy and product launches.
And right now, Tesla’s latest software update tells us what the company is up to.
Hidden in Tesla’s software is something called a “pay as you go” subscription plan for its Autopilot package. This gem reveals Tesla’s master plan…
Tesla plans to launch a monthly subscription service for the full self-driving mode of Autopilot later this year. This is huge news.
Right now, most Autopilot miles are on the highway from on-ramp to off-ramp. Tesla hasn’t yet released full autonomy in its software.
The upcoming premium version of Autopilot will be fully autonomous. We will be able to have our Tesla drive us from Point A to Point B without us ever needing to touch the steering wheel.
And the fact that this option is coming later this year shows us how far along Tesla is. Tesla’s release of the software enabling a subscription payment model tells us full autonomy is in the very near future.
Tesla was very clever with its business model.
It sells or leases the car, and then it offers software upgrades like Autopilot for additional fees. Autopilot can be purchased for $7,000 outright, but that steep price tag is out of range for most consumers. That is why a subscription model is so attractive.
Early estimations for the premium Autopilot package are just over $100 per month. Tesla is imitating Silicon Valley software companies by choosing a software as a service (SAAS) strategy. These models have been remarkably successful over the last decade.
This makes a ton of sense, and I think it will do very well for Tesla. How many Tesla owners wouldn’t pay $100 per month to have the car drive itself? It’s a great value proposition.
And then we should think about what happens when Tesla turns on its autonomous taxi network…
Remember, Tesla’s taxi network will allow anyone who owns a Tesla with the 100% self-driving package to put their car to work when they aren’t using it. The car will go out and provide taxi rides to consumers until it’s summoned back to the owner.
We can think of it like Tesla’s version of an Uber or Lyft. I can even envision an option for the car to go to a service location to be cleaned and disinfected before returning to its owner.
The owner will receive a large portion of the revenue generated from these rides… which means the Tesla will ultimately pay for itself. At that point, the car is free for all practical purposes.
Who wouldn’t want to own a Tesla then? Think about it… Sign a lease for a Tesla Model 3, and drive it home. Then, monthly revenue from the robo-taxi service pays for the lease and then some.
This is a brilliant move from Tesla. The company will generate predictable, recurring revenue from the self-driving subscriptions. Plus, the company will generate more revenue by taking a percentage of the money generated from the ride-hailing service. And it will sell more EVs than anyone else in the world.
Can any other traditional automaker say that?
Bottom line: I’m still a Tesla bull. And while the stock is richly valued where it is now, this company has a very bright future ahead of it. Legacy automakers should be very nervous.