Tesla Motors Inc is in the midst of many brutal battles. The EV-maker has to deliver a minimum of 80,000 units in Q4, keep pace with the Model 3 schedule, manage the controversial SolarCity acquisition, expand its energy storage segment, and complete the Gigafactory. And lets not forget, Tesla is facing intense scrutiny over Autopilot including the recent war of words with its former partner MobileEye. It’s also facing, rising completion in both – EV space and develop self-driving capabilities. Recently, Uber showcased its driverless tech in Pittsburgh, and overall it was impressive, notes Business Insider.
Despite all of this, Matthew DeBord of Business Insider, believes “Tesla is still going to win the self-driving-car race, for several reasons.”
According to DeBord, Uber’s self-driving tech uses pretty costly equipment. On the other hand, Tesla is working to deploy less costly systems with an objective to easily accommodate the cost of the Autopilot in the vehicle price. “I have no knowledge of how much each Uber self-driving setup costs, but I’d be surprised if it’s less than $100,000 per vehicle. It could be great, but Autopilot could be good enough,” said DeBord.
Not to forget, with Autopilot, the Elon Musk-led company is collecting a huge volume of real-time data, which will surely help Autopilot-enabled vehicles continue to improve. This can only be rivaled by Google, but it “isn’t running a global fleet of hundreds of thousands of cars,” says DeBord. Also, the EV firm is way ahead of others, adding “real-world partial self-driving to its vehicles while everyone else is just getting started,” says DeBord.
And, even if full autonomy gets too challenging to achieve, Tesla Motors Inc can always make it in a hybrid-driving/self-driving landscape along with bettering its electric-car tech.
Tesla – in a profitable segment
Another point by DeBord is “Fleets are good and bad.” The benefit of full autonomy and fleets is that one doesn’t have to own a car, and can always summon a self-driving car using Uber, Ford and Lyft-GM. Most of these automakers are experienced in supplying vehicles to fleets, but since fleet sales are not part of the consumer market, they are less profitable than “selling or leasing, say, $100,000 luxury vehicles to people, something Tesla is doing relatively well,” says DeBord.
Tesla has been able to almost double its deliveries every year, and aims to hit 500,000 units by 2018. The EV firm could easily be profitable with 20% to 30% gross margins, if it “weren’t spending so much money trying to become a mass-market carmaker. Then again, the nearly 400,000 preorders it has for the Model 3 is nothing to scoff at,” says DeBord.
Going forward, the de-owned, driverless fleet concept may gain momentum, but presently, the highest profits in the auto industry is with Tesla – thanks to its luxury fleet – especially the Model X. The risk could be with the less-expensive Model 3.
DeBord notes that Tesla Motors Inc is the only player that’s hedging its bets, and “is in an established, well-understood business, at the core.” People love the brand too.