Understanding Musk's Sun Strategy for Autonomous Driving in Tesla's "Important Moment" Article

In 2008, the world's first Tesla car was delivered, and over the next decade, Tesla gradually became the benchmark for electric car brands.

However, an important piece of the Tesla car revolution puzzle - the Robotaxi business for autonomous driving, has been all talk and no action for many years. After multiple delays, Elon Musk confirmed a clearer timetable at the July earnings call this year, Tesla will hold a Robotaxi unveiling event on October 10. On September 26, Tesla officially released a teaser poster for the event.

Some people posted that this will be the "most important moment" for Tesla since the launch of the Model 3, to which Musk responded positively: yes.

It is worth noting that Tesla will introduce a brand new model designed specifically for autonomous driving, rather than using existing or modified Tesla cars for the taxi business. Musk temporarily named the Robotaxi model "Cybercab". The public is trying to glean more details from Musk's "spoilers", and the information currently available includes -

Cybercab may not be equipped with a steering wheel and pedals, relying entirely on Tesla's Full Self-Driving (FSD) software; the manufacturing cost per vehicle will be very low, and the fare per ride may be similar to a bus ticket; it will be produced at the Texas Gigafactory and will adopt a new "boxless" manufacturing strategy (separately handling different parts of the car and assembling them together in the final stage, aiming to reduce costs and factory footprint), with plans to start mass production in 2024; the design style is futuristic, possibly similar to the Cybertruck; Musk also hinted at the possibility of showcasing some additional content at the unveiling event.

Musk stated that the fare for Tesla's autonomous taxi will be similar to a bus ticket

Leaks from tech media, automotive bloggers, and others have also generated more discussion about this new car, such as -

Cybercab is built based on the "Model 2" (a cost-effective consumer model still in development, resembling a more compact Model Y, unofficially known as Model 2), estimated to have 2 seats, lower manufacturing costs, and energy consumption; Tesla will unveil Cybercab at the Warner Bros. Studios in Los Angeles (the filming location of "Interstellar"), according to leaks from studio employees, a uniquely shaped, heavily disguised small vehicle appeared in the Tesla fleet (see image below), with two doors and two seats, covered in yellow tape, a box-like protrusion at the rear to conceal the body curves, a possible raised laser radar on the roof, although with increased photo exposure, a steering wheel is still visible Whether it's the Cybercab spy photos, teaser posters, or the recent product roadmap from Tesla's AI team — expecting to launch FSD services in China and Europe in the first quarter of 2025, all these messages seem to be telling everyone, "We have something big in store."

Tesla's current product line (Model S, X, 3, Y, Tesla Semi, and Cybertruck), including three undisclosed models under development. Years of planning suddenly accelerating.

In 2016, Tesla unveiled its second decade plan, the "Tesla Blueprint Sequel" (Master Plan, Part Deux), in which Musk first mentioned the vision of autonomous taxi services and "shared mobility": in the future, autonomous driving technology will allow Tesla owners to rent out their cars when not in use; in 2019, Musk first referred to these future cars as autonomous taxis and pledged to have 1 million such vehicles on the road by 2020.

This year, Musk has pressed the accelerator for his autonomous taxi business.

It all started with two internal meetings in February, where Tesla's R&D team presented early development results for the "Model 2" and Robotaxi to Musk. Regarding the "Model 2," Musk had already revealed during the quarterly earnings call on January 24 that this car is expected to go into production in the second half of 2025, with an estimated price of around $25,000.

With the "Model 2" schedule basically confirmed and the development progress ahead of the Robotaxi model, Musk made the decision to change the original plan and first launch the Robotaxi model.

According to The Information, a departing employee stated that over that weekend, Musk's key subordinates conveyed new instructions to their teams, temporarily shelving the "Model 2" project. This decision was very sudden, and many employees were puzzled, especially since Robotaxi was still just a concept at the time. A former mid-level executive at Tesla exclaimed, "He's treating a barge like a speedboat."

Several departing Tesla employees also revealed that Tesla plans to use similar batteries, motors, and other innovative technologies in these two models to reduce design and production costs and shorten the engineering cycle.

Musk's preference for the autonomous driving business over the "Model 2" is not surprising. In the "Tesla Blueprint Sequel," he stated that a lower-cost car than the Model 3 is "unlikely to be necessary," and he has never confirmed the name "Model 2." The Verge reported that earlier this year, Musk was essentially pressured by investors to refocus on developing the "Model 2" and promised to launch lower-cost models in the coming years Martin Viecha, who was the head of investor relations at Tesla at the time, also shed light on the positioning of Robotaxi. He stated at the 2022 Goldman Sachs Technology Summit that Model X and Model S are Tesla's first-generation platforms, Model 3 and Model Y are the second generation, and the Robotaxi business will become the third generation platform.

Profit model to be determined, regulatory obstacles hard to overcome?

Elon Musk has repeatedly expressed his hope to provide people with the lowest cost per mile transportation through Robotaxi and FSD. He provided calculations at the 2019 Autonomy Day event: "The cost of someone driving a taxi today is $2-3 per mile, while the cost per mile of Robotaxi is only $0.18."

To achieve the goal of having fares lower than human-driven taxis or even public transportation, business scaling and extreme cost reduction are needed.

It is said that through improvements in design and assembly technology, the unit price of Tesla Robotaxi could potentially drop to below $150,000. In addition, according to Musk's vision, consumers who purchase Tesla Robotaxi can not only use it for personal use but also let the car earn money by operating as a taxi, and owners who join the Robotaxi fleet can "earn $30,000 per year." This idea completely overturns the traditional business model of the Robotaxi industry of "self-owned, self-purchased, and self-operated."

According to Huaxin Securities' calculations, the single-car profit model of Robotaxi is expected to be achieved around 2027. From the perspectives of revenue and cost, the main cost reduction drivers on the cost side are reflected in the decrease in hardware costs and the decrease in single-car remote safety personnel costs brought about by the improvement in autonomous driving capabilities; from the revenue side, with the improvement of two indicators, the increase in Robotaxi operating hours and the decrease in idle rate, it is expected to achieve a balance between single-car profit and cost in 2027.

However, while the idea is promising, compliance remains a major challenge in the scaling process of Tesla's Robotaxi.

For example, "no steering wheel and pedals" could be a major innovation point for Tesla Robotaxi. However, the U.S. Federal Motor Vehicle Safety Standards (FMVSS) require vehicles to be equipped with basic manual control devices, such as steering wheels, pedals, and side mirrors. Currently, Tesla has not obtained an exemption from FMVSS.

Tesla acknowledged in a letter to shareholders that it needs approval from the U.S. federal government to deploy more aggressive Robotaxi designs, and its statement is quite vague, "Although the deployment time of RoboTaxi depends on technological progress and regulatory approval, given its enormous potential value, we are actively seizing this opportunity."