Elon Musk recently tweeted on X that buses will soon be obsolete as Tesla gets its robotaxis up and running
This quite predictably created a wave of finger wagging from the anti-Musk crowd, most notably from Fred Lambert, a former Musk devotee who most recently let the world know that he’d sold all his Tesla stock. Here is what he said.
Musk claims that Tesla’s autonomous taxi service will be similarly priced as a bus ticket.
Does the math work?
For example, New York City’s Metrocard, which covers both local buses and subways, cost $132 per month.
The average daily transit commute in the city is reportedly 13 miles. This adds up to $0.34 per mile.
Interestingly, after Musk first announced Tesla plan to launch an autonomous driving service using its existing electric vehicles, a study from the University of Virginia, and the University of Texas at Austin tried to estimate the cost of such a service.
The study came to the conclusion that autonomous rides in a Tesla Model 3 would cost about $0.663 per mile.
….
I think an autonomous ride-hailing system powered by electric vehicles would have tremendous value, but we still don’t know exactly how disruptive it is going to be. Some overvalue it and others undervalue it.
It’s fairly obvious that it would be extremely disruptive for ride-hailing services like Uber.
However, Musk is overpromising by claiming that it will disrupt public transit. In some markets, it might be more competitive and shave some demand from the top of the public transit market, but I doubt it will be a huge chunk based on these numbers.
Of course, Tesla also needs to roll out its “unsupervised” self-driving and there’s no clear timeline for that either.
Fred’s point is that it is hard to predict the market price of a robotaxi service. He is most likely right about that. But he uses a flawed premise to prove his point.
His big mistake is that he uses NYC’s Metrocard prices to come up with his $0.34 estimate for the cost per mile, which he says is cheaper than the projected $0.66 estimate for a robotaxi.
Almost anyone who lives in NYC has heard of the Metropolitan Transit Authority, the entity that runs the NYC Metro, and its financial travails. The MTA is a heavily subsidized entity that relies on the taxpayers largesse to keep itself running.
In 2019, only 42% of its revenue was from fares collected from its riders, and I would assume this percentage has only declined since COVID.
So, using a Metrocard price to estimate the cost of a New York mile is a bit foolish. You will have to at least DOUBLE the $0.34 estimate to get close to accurately capturing the cost per mile.
And at double the $0.34 estimate ($0.68), a robotaxi ($0.66) IS cheaper than a bus!