While no company has yet achieved the feat of deploying a fully autonomous vehicle, many investors have their sights set on Tesla (TSLA 12.06%) as the vehicle maker most likely to win this race. In this segment of Backstage Pass, recorded on Nov. 3, Fool.com contributors Trevor Jennewine, Brian Withers, and Rachel Warren discuss.
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Trevor Jennewine: I personally think that it's likely that Tesla is the first company to get a fully autonomous car out there. Once it has that, I think it changes the business. Tesla wants to start an autonomous ride-hailing service and Elon Musk has talked about licensing its self-driving software to other automakers or allowing other automakers to use its Dojo supercomputer. All of those cases, Tesla becomes a provider of software and services. This is where I built on what Brian said. Some analysts put the autonomous ride-sharing market at $1.2 trillion by 2030, and then on top of that, Tesla is going to be generating subscription revenue for its full self-driving software.
It could be licensing a software to other automakers, like I mentioned. Instead of a hardware, or a car company, it becomes more of a provider of high-margin recurring revenue from services and software. I think you could even go further and Tesla could actually expand on its ride sharing network. It could build a whole services ecosystem on top of it.
It could launch its own streaming service or a gaming service that riders could enjoy, whether in the cars or they could partner with retailers to provide mutually beneficial arrangements. For instance, if you typically stop at Starbucks on your way to work. Starbucks and Tesla could partner, and Tesla's cars could say, "Hey, there's a Starbucks one mile off the road. Would you like to stop on your way to work and get a morning coffee?" There's lots of different options there.
Then one more, and we're getting very theoretical here. But one more thing, the company introduced its Tesla bot, or they talked about it during AI Day. They don't even have a prototype yet. This is very far away from being reality, but Elon Musk did say they would have a prototype by 2022. Again, they're taking their AI software and these Tesla bots, so if this actually turns into something, it could change a lot of industries, especially where humans are performing dangerous manual labor.
An artificial intelligence or an autonomous machine can take care of that. People can have autonomous machines or robots in their house doing chores and anything else that they didn't want to do throughout the day. Again, all of this hinges on Tesla's ability to really capitalize on its artificial intelligence, but that is my answer. You guys have any thoughts on that?
Brian Withers: Yeah, Trevor. I was thinking Tesla, but I was being very shortsighted in just multiplying times the number of Model 3's to the trucks as it expands into other form factors. But you make a great point and I'd love to see those stats that you had on the number of hours or the number of miles that Tesla has thats so much further ahead than everybody else. The data is going to win here. Having more data and being able to do intelligent things with it, and it sounds like it's totally possible. I loved your pitch.
Rachel Warren: Yeah, I was going to say that was like the greatest pitch for Tesla ever. I like what you were saying about it's AI wing of its company and all the different things that we're doing with AI. I feel like that's one area that it's easy to forget about in terms of we see our society moving increasingly digital.
I think it's those trends that are really going to be driving companies forward in the years ahead. I think Tesla could be one of these now and I think I'm interested that I don't follow Tesla that closely, which I know is like sacrilegious to say. [laughs]
Withers: But it's not in the MANAMANA acronym.
Warren: I know, so maybe I'm being short-sighted here.
Withers: [laughs] Maybe Trevor, you need to go on the morning show and work with Bill on a new acronym.
Jennewine: No I really like that acronym. [laughs]
Warren: It's super fun to say.
Withers: It is fun to say. [laughs]
