Tesla, Inc. has pinned high hopes on its full-self driving software and its robotaxi service. A Tesla bull has a recommendation for the electric vehicle maker to make it capitalize big on this opportunity in double quick time.
What Happened: Future Fund’s Gary Black raises the prospect of Tesla buying Uber Technologies, Inc. to get into autonomous ride-hailing and get all the data from the latter’s 137 million consumers. Uber’s customers take 25 million trips per day, he added.
The fund manager’s suggestion did not go down with some Tesla influencers, who pointed out that Apple did not go on to buy Sony Group just because the latter had Walkman. They also noted that Apple did not buy BlackBerry for its smartphone.
In reply, Black said Tesla starting its own ride-hailing network and competing with Uber with 137 million customers would be a “truly horrible” idea. He said expressed doubts OEMs and Uber will pay Tesla hundreds of millions in licensing fees for FSD.
“Elon has been asking for them to do that for years and so far no takers,” he added.
Black said he sees enormous revenue potential for Tesla if it adds its FSD hardware and software to all 6 million Ubers.
One of the Twitter users did not think the option makes sense. Tesla’s data is far superior to what Uber has to offer, as the former is accumulating billions of miles of data from the door opening, seat pressures, suspension, weight, etc, for every single Tesla on the road around the world, the user said.
Why It’s Important: Cathie Wood’s Ark Investment Management, expects the service to account for 47% of Tesla’s revenue by 2027 and 54% of EBITDA. Robotaxis will make up 67% of the company’s $6.1 trillion enterprise value four years from now, it added in the valuation framework released in April.
Black’s not-so-positive sentiment toward robotaxis may also have to do with the pushed-out FSD launch due to regulatory hiccups. The software is currently in beta testing and the timeline for a broader availability isn’t yet known.
Even if Tesla comes around to consider buying Uber, which has a roughly $95 billion market, it cannot do with its cash on hand and may have to either sell shares or raise debt financing to be able to buy the latter.
Produced in association with Benzinga
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