Tesla Model S
Douglas Stansfield's picture

One Person is Going to Buy 500,000 Teslas

At between $75,000 and $125,000 per Tesla that would be a purchase of $62.5 Billion at the $125k price point. Who would be able to spend that much money on Teslas? Why would someone need half a million Teslas and what in the world are they going to be used for?

First of all we heard the government in LA is buying a fleet of EVs but even that wasn’t 500,000. How about the USA government? They could afford to buy that many Teslas if they had some useful purpose? I’m doubtful of that.

Well this isn’t an actual order but one that was more like a commitment to buy. Turns out that Uber CEO Travis Kalanick told Venture Capitalist Steve Jurvetson that he would buy 500,000 self-driving Teslas in 2020 if they were available! Now that is one big commitment.

So now you can connect the dots. Why would Uber need 500,000 Teslas? We don’t have to look very far back in recent history to know what comes next. Take McDonalds for example. The city of Seattle increases the minimum wage to $15/hr and McDonalds responds by installing self-ordering kiosks in their locations. So with Self-Driving Teslas, Uber can just program the cars to sync up with the apps and each driverless Tesla will show up at an address and Uber collects the whole fee. No drivers needed.

There is some speculation that the move to autonomous cars will change the car buyers’ market entirely as we know it. What this means is that in the future, people may forgo the whole car buying experience in general. The reasons would be economic and convenience. If you live within a certain radius of a big city, you could likely satisfy all your driving needs with the app on your phone. You need to go to the store? Summon an Uber vehicle and the self-driving car shows up at your door. The car then takes you to your destination and it can either wait for you, or you summon another ride when you are done.

The future here is not as far away as you think. The CEO of Uber wants to buy them in 2020 if they are available. What if they are available sooner? Some implications of this disruptive technology would be the following:

  1. Significantly less auto dealers – If people just stop buying cars and instead just hire cars, why would you need Auto Nation?
  2. Auto Insurance would significantly change – If no one buys the cars they are riding in, the insurance liability would fall on a few companies that compete in the car hire space but the auto insurance market will impacted negatively.
  3. Gas Stations and Mechanics Garages – if no one owns cars, then you wouldn’t need to get them fixed and if all the cars are electric, you don’t need gas stations.
  4. Tire Stores and Auto Part Stores – Each Uber depot will be maintaining all their own fleet as well as Lyft and any other would be provider in this space. Why would Auto Part stores and tire stores need to exist?
  5. Oil Change stores – If everyone is hiring self-driving cars that are electric, you don’t need to go to the Jiffy Lube.

I am sure there are other implications but in terms of a disruptive shift…Uber is doing more than just displacing Yellow Cabbies….

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Comments

Is this what passes for "journalism" these days? First, the Uber guy said he'd buy self-driving Model 3s (not Model S's) which will allegedly have a base price of $35,000 (which I doubt Tesla will profitably achieve, but that's a different story). Second, as Uber is reportedly losing $500 million a year; how does it propose to pay for those cars? His "offer" smacks of a 1999-style "my bubble stock company will scratch your bubble-stock company's back and we'll both call it "revenue". Third, Tesla will be lucky if it can produce and sell 50,000 non-self driving cars this year-- to think it will be able to produce 10x as many five years from now is beyond dreamland. And finally, NO ONE will have a "self-driving" (as in "driver-less") car legally on the road for at LEAST another 10 years and maybe not for another 25-- there are just too many liability issues and accident-causing "edge cases" involved. Part of being a journalist is doing more than just acting like a press-release repeating PR flack, and yet most of the media these days (I don't mean to just single out this author) seems to have never learned that.
I'm not trained as a Journalist so please forgive me. I am however passionate about EVs. I read this quote and it was reported as Tesla's Self driving cars were the target buy, not I3s. Additionally, I have yet to see any news of BMW I3s being built as Autonomous although that could be true as I don't claim to know everything. All in all, the idea of this story was to try and explain the impact if the market did in fact go that direction. I'm not predicting it will but it definitely could. Thanks for commenting. I do the best I can to help bring informative EVs to the public's attention. Keeps everything fair that way.
The first comment was referring to the Tesla model 3, not the BMW i3. Just an fyi.
You've identified a few of the disruptions, but there are many more. Parking lots will be used for higher purposes, maybe urban gardens or parks, or a business generating more income than a parking lot. Cars will no longer be parked on the street since few people will own them. This opens up lots more room for bicycles and pedestrians. Uber will self insure, so the insurance agencies will get out of the auto business altogether. Instead of consumers spending over half a trillion dollars on gasoline every year, they'll spend a small percentage of that much transporting themselves with Uber, and spend the rest on local goods and services generating millions of jobs for those displaced as truck,bus, cab/Uber drivers. The 33,000 Americans killed every year in auto accidents will not be killed. Traffic jams will go away entirely, so those who wish to keep driving will be able to do so without having to deal with traffic. Our air will get a lot cleaner, and our neighborhoods a lot quieter.
Thanks for the additional ideas of how things will change. I knew there were more but kept the story down to a minimum. You have identified other disruptive elements and I truly appreciate that. Please share the story. I believe others will have more great ideas. That way public opinion with help facilitate the needed change....