Tesla FSD is making huge progress on a weekly basis. Like all AI products like Open ChatGPT and the chess and Go AI programs this will continue. Those looking at the nearterm are looking at take rates or percentage of Tesla buyers who buy Tesla FSD. Those looking out are looking at Robotaxi but I see something that is not only more valuable than Robotaxi, it will also have a faster transition. This is Robotruck.
Near Term FSD
Stock Analyst Gene Munster estimates that only about 5% of new Tesla buyers either purchase or subscribe to FSD. If that number goes to 20% in 2026, the incremental 15% of subscribers would add about $1.1B to revenue and close to $1B to net income. Rough numbers are the increased adoption would add about 8% to net income in 2026. Given the waterfall nature of the subscription business, that benefit would compound going forward. In 2027 the benefit to net income would be around 15% and 21% in 2028.
Gene’s quick analysis is flawed. The other aspect of a fast learning FSD software is that Tesla will have a clean introduction into China, Asia and Europe. Also, Tesla will be able to get more of the old fleet of Tesla owners to adopt FSD. There are twice as many old Tesla as new Tesla sales. A 15% adoption rate in older Tesla would provide $2 billion in net income over 2024-2026.
If the software continues to improve and gets safer than most human drivers, then bundling with insurance could get adoption rates up to 50% or more.
Robotaxi Revenue
Robotaxi would need regulatory approval and customer adoption. Currently, people using Uber, Didi and Taxi are generating $200 billion per year in revenue globally and could become $300-400 billion by 2027-2030. It would take time for Tesla robotaxi to get launched, get market share and grow the market.
Robotrucking
Robotrucking will be more impactful than Robotaxi in many ways. If truck drivers are replaced for all 30 million large trucks and perhaps another 100 million small and medium sized commercial trucks in the world this will transform the supply chain.
There are 3.6 million truck drivers in the USA. There are 20 million truck drivers in China and 20 million truck drivers in India. There are about 5-6 million truck drivers in Europe.
The transport costs in the supply chain could eventually be reduced by 80% or more. Driving speed for delivering cargo could increase from 55 mph to 110 mph or more. Also, the robotruck could drive 23 hours a day and only stop for recharging.
Truck fleet owners will not hesitate to replace human drivers once the systems are good enough. 70% of drivers could be replaced once there is a driving system that could safely platoon trucks. Platooning trucks involves robotic trucks following a lead human driver.
As stated before, Tesla’s AI team recently announced that the software can train with Youtube videos of driving. This means the system is independent of camera positions. $150,000 semi trucks can get cameras and self driving computers added for about $40,000 per year plus the hardware. This means the existing fleet can be rapidly converted to remove the driver for a 4-12 month return on investment.
$40,000 per year made on all 30 million trucks would be $1.2 trillion per year. This would be about one hundred times the current profits at Tesla.
It would take 3 years to get regulatory approval and then 2-3 years to make and install all of the camera and driving hardware retrofit kits. Tesla would also ramp up the electric Semi.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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Can someone remind me how these driverless trucks will recharge?
There are so many exceptions, only intelligent human can handle. I don’t know it we will see trucks without driver anytime soon at least not on massive scale.
“Driving speed for delivering cargo could increase from 55 mph to 110 mph or more”
This is probably a joke, far away from reality as far as Pluto from Earth.
Convoys of Trucks with each behind each other is not bad thing. If they are close enough and synchronized the benefits from reduced drag is quite good and fuel, energy savings are decent.
This level of profits will never materialize. Profits are not determined by looking at the cost savings of the new system. Profit levels are determined by market conditions. One or a few suppliers means higher profit margins then if there are many interchangeable suppliers. You could say a company’s profit margin is an indicator for its monopolistic power.
Tesla may for some time be a monopolistic supplier, but eventually competing systems will arise. Even Elon himself has acknowledged that. And if Tesla would charge 40K per year, the incentive for others to enter the market would be enormous. And there is no barrier to market entry, like there is with e.g. the Google search engine. BTW there never have been companies with profit margins implied by suggested profits.
I still don’t understand how a room-sized supercomputer capable of self-driving in nearly all situations – emphasis on NEARLY because the edge cases can be fatal – can fit into every truck or car. And if it needs to be always be uninterruptedly connected to the central computer, that’s an opening for a world of hurt. Just think how many times cellphones drop a signal, even for a few seconds. That would be fatal without a human driver to take over – and maybe even with one, if the natural tendency to get complacent takes over.
More important than FSD trucks in the short term would be electrifying the fleet in or near major urban areas. There’s a major push to ban trucks in areas of high asthma along heavily trafficked truck routes/warehouses. This is clearly impossible – NYC’s Hunt’s Point alone gets at least 16,000 trucks per day: https://www.thepacker.com/news/industry/logistics-delivery-hunts-point-terminal-market but this figure was from 2017 and it’s been substantially upgraded and expanded since then. Still, asthma and poisoning from diesel fumes costs billions worldwide and shortens lives too. If cargo could be quickly switched to electric cabs with the same trailers at a semi-rural truck depot, then driven the rest of the way to major stores – smaller loads can be redistributed to smaller trucks, even e-cargo bikes – then city air would clean up a lot.
It’s not a room sized super computer driving.
it’s warehouse sized computers teaching via a lot of iteration, an AI that can run on a cars computer.
robotrucks are a GREAT idea! i think the whole trucking industry could be massively changed by large trucking companies adopting a hybrid drone/fsd model. -the trucks could be driven to interstates (and off of interstates) using the drone capability with a remote driver sitting
in a ops center somewhere. once on the interstates, fsd could take over. -this could all be
operated from about 10PM to 6AM every night to avoid traffic problems as much as possible. this could also be tied into various DOT networks to determine which roads are under construction or experiencing weather problems when. anyway, GREAT idea!
Robotrucks are more likely to follow minimum speed limits than maximum. With the driver’s time out of the equation, fuel is your next biggest cost. Drive slow to save fuel unless the load has a reason to go fast.
AV B2B trucks are already a thing in small areas. Look up Gatik.
Robotruck might have a relatively easy regulatory path in many areas.
Robotruck can also have smaller batteries. A robot doesn’t mind driving 100 miles, charging for 30 minutes, driving 100 miles, recharging, etc. AI can accelerate EV truck production by reducing battery bottlenecks, simplifying tractor design, and reducing tractor cost.
Releasing millions of people to more productive work could mint a trillionaire.
“Driving speed for delivering cargo could increase from 55 mph to 110 mph or more.”?
Drag has something to say about that, along with the other people on the road.
Indeed, the luddites will have much to say about this topic. I see ~50mph the likely compromise since the lower limit on most interstate runs is 45.