hey guys welcome to connecting the dots the channel where we follow the breadcrumbs and try to predict where disruptions will take us on July 1st 2024 Elon Musk made a simple gesture that sent shock waves through the Tesla investing world he followed Uber founder and ex-ceo Travis kalenic on X this ignited speculation about kalenic joining Tesla as head of Robo taxi and Elon quickly denied this but make no mistake that follow wasn't just a friendly nod it was a signal heard loud and clear in Uber's headquarters the modern equivalent of War drums beating Uber investors like Bill Gurley and Brad gersner think Tesla will cooperate with Uber for a perfect win-win good for them but I think otherwise I'm convinced Tesla has its sight set on Uber's Turf and they're not coming to play nice if I were an Uber investor I'd be losing sleep I won't Bore You by repeating what everyone else is saying instead I'll provide a complete game plan for how Tesla could wage war on Uber and win if you enjoy my Channel please like subscribe and hit the that Bell icon to stay notified a massive thank you to our newest patrons Fab mag 1 Martin V George H Marshall Dennis C and Zara L you guys rock if you two want to help keep these videos coming there's a link in the description now buckle up and get ready because Tesla is about to disrupt the Daylights out of uber and disruptions are never boring chapter one The buying Uber fallacy in my previous video I showed how Tesla could disrupt Uber through significantly lower costs and much higher revenues than ride hailing experts such as Bill Gurley and Brad gersner expect the analysis painted a clear picture of Tesla's potential to foundationally disrupt the ride hailing industry if you want to delve into the profitability edge there's a link in the card above now let's explore a different angle a while ago Tesla analyst Gary black posted this question on X I'm not sure why Tesla just doesn't buy Uber to get into autonomous ride haing and get all the data from its platform of 137 million consumers who take 25 million trips per day I do understand Gary's perspective Uber's massive user base and trip data could really jump start Tesla's ride hailing business however as stated in a reply thread I posted I very respectfully disagree with Gary's conclusion as shown in my previous video Tesla can completely disrupt Uber's business using the correct Apples to Apples math even the current model 3 costs Tesla less than half of what investors like Bill Gurley and Brad gersner claim is enough to completely disrupt Uber to see how that happens watch my previous video after watching the current one but anyway when you're out to disrupt an industry you don't pay full price for a company whose value you are set to abolish consider Netflix buying Blockbuster at its peak just to acquire their customer base or apple purchasing Nokia at its prime for its loyal customers both scenarios would have been financially disastrous and unnecessary for the disruptors similarly buying Uber doesn't make sense for Tesla instead I always thought that Tesla should buy Lyft which for less than 4% of Uber's value could give them as much of a jump start however things changed and they don't even need to do that if Uber's main asset is its user base Tesla can gain a similar Advantage almost for free you know how elon's companies all come together for example xi's grock will probably become the AI interface for commanding Tesla's cars and Robo taxis and the boring company just drilled a tunnel to the other side of the road from gigatex similarly Elon musk's ownership of X could become Tesla's secret weapon in the ride haing War by integrating a ride haing button into X's interface Tesla gains instant access to hundreds of millions of users worldwide why pay $150 billion for Uber's 137 million users when you can reach an even larger audience at minimal cost now is a good time to give a slow clap shout out to The Experts who booed Elon for burning billions of dollars on buying Twitter the everything app is much more than a social media Network and I'll be here to remind them when Robo taxis arrive on X this leveraging of existing assets to disrupt an established industry is just the beginning in the following chapters we'll dive deep into Tesla's potential strategy to not just compete with Uber but to fundamentally reshape the ride hailing Market from using X as a secret weapon to a city-by-city conquest plan we'll explore how Tesla could bring Uber to its knees with the content I consume plus music and phone calls earbuds are a vital part of my everyday life a few months ago I discussed my latest pair rayon's everyday earbuds their sound made my wife say it reminded me of how much I love this song and with stylish looks and long playtime these quickly became my favorite pair so when raycon the sponsor of this video launched a new version I couldn't wait to get them the new ones keep the clean sound and everything I loved in the previous version and add a Slimmer case that fits better in my front pocket multi-point connectivity and active noise cancellation and with the new quick charge feature just 10 minutes of charging give 90 minutes of playing time raycon also offers beautiful case covers to protect an ad style mine is in Galaxy color and looks very cool if you're considering earbuds as a gift the case would be an excellent addition click the link in the description or go to buy ron.com dos to get 15% off your raycon purchase plus free shipping raycon offers a 30-day risk-free trial and a one-year warranty so you have nothing to lose visit bon.com dos and experience yourself chapter 2 x marks the spot having access to X enables Tesla to ramp operations quickly without buying Uber or lft so let's dive deeper into Tesla's secret weapon while X is mostly a social network its eyes are set on becoming the everything app and regarding Tesla's Robo taxes X should become Tesla's gateway to dominating the ride hailing industry by integrating a simple Robo taxi button into the X app Tesla will instantly gain access to a massive potential customer base this strategy leverages X's hundreds of millions of active users providing Tesla with an immediate advantage over traditional ride hailing apps moreover ex users could hail rides without leaving their favorite social app while this seems trivial and unimportant this frictionless experience could be a GameChanger happiness researcher Shan hore's 22nd rule shows that even small changes in effort can significantly impact behavior for example taking a guitar out of its case is easy yet you are much more likely to practice your guitar playing if it's ready on a stand rather than waiting in its case psychologically having a robo taxi order button built into X removes a crucial barrier to use just click a button to summon a robo taxi and while you continue reading and posting on X a status bar will keep you informed on the arrival of your ride Tesla will likely offer both oneclick ordering and detailed screens for long rides or ones with special requirements you will enter the detailed screens like the one Tesla already showed but for most rides a single click could summon the nearest Robo taxi the passengers will simply tell it their destination when it arrives this streamlined process takes advantage of the interchangeability of autonomous vehicles unlike Uber's need to match passengers with drivers willing to head their way any Robo taxi with enough charge can take passengers wherever their destination to gauge interest in this concept I ran a poll on X asking if x had a robo taxi hailing button in your region would you try it the results were overwhelming almost everyone both current Uber users and non-users alike said they would give Tesla's Robo taxis a try while my followers in X are far from representative their enthusiasm suggests that Tesla could quickly build a user base rivaling or surpassing Ubers all without the massive expense of an acquisition it's a brilliant example of elon's companies leveraging existing assets to disrupt an established industry but the advantages of using X go far beyond just access to users Tesla can get X to leverage user data for targeted marketing offering personalized ride suggestions and promotions real-time trip updates can be seamlessly integrated into X's notification system and users sharing their robotaxi experiences on X will provide organic marketing for Tesla's service although X should be Tesla's main portal for generating rides Tesla will probably provide separate ride hailing access via the Tesla app or a new dedicated one this will enable non-x users to order rides without having any social network functionalities as a side note we are used to Elon showing the way and others later following for example when Elon fired 3ars of Twitter the media showed this as crazy yet a few months later most tech companies copied and considerably downsized as well similarly it is likely that shortly after Tesla's move Uber and Lyft will also team up with platforms like Facebook or Instagram to offer ride hailing features through their apps as well as Tesla's strategy unfolds one thing is clear x marks the spot where Uber's dominance might just come to an end chapter 3 Dominate and Conquer Tesla's about to enter the ride hailing Arena but let's face it they can't match Uber's Global presence overnight even with some Tesla owners joining the network building a fleet large enough to compete everywhere simultaneously is a tall order although I expect cyber cab production to ramp up quicker than anything seen before producing enough cyber cabs and even regular model 3es and y's to take on Uber will take time and spreading themselves too thin could lead to subpar service and frustrated customers so what's the smart play concentrate the fleet and dominate one area at a time it's not about being everywhere it's about being the best in every city you operate now here's the kicker most of Uber's profits come from just six major cities that's right only six by targeting these Urban cash cows Tesla can hit Uber where it hurts without needing a massive Global Fleet picture this you wake up one morning in New York San Francisco or London and find out that Tesla has flooded the city with cars and there's a robo taxi on almost every corner you enter X and learn that Tesla has started operating Robo taxis in your city and is offering ex users three free rides free is easy for them as with no driver and with building their cars themselves Tesla's marginal costs are a fraction of Ubers so you click on the new ride hailing button and regardless of where you need to go the nearest Robo taxi quickly arrives and takes you to your destination safely and securely minimal weight times Superior Service your personal YouTube and Spotify accounts on the main screen and cheaper rides to boot who wouldn't switch this saturation strategy is a triple threat it ensures top-notch service in key markets so people will move to Tesla it enables Tesla to quickly build its crucial rout database Gathering data and shifting Robo taxi locations on different days and on top of it all it puts immense pressure on Uber in the cities which matter most as Tesla builds their database they won't need to flood the city is heavily and will be able to shift cars to the next location and as they conquer these cities one by one they'll refine their playbook Iron Out The Kinks and build a rock solid foundation for Global expansion here's the real gut punch for Uber without these six cities they're in serious trouble Tesla doesn't need to beat Uber everywhere they just need to snatch these golden geese do that and Uber's Empire starts to crumble in the Ride haing game it's not about being everywhere it's about being unbeatable where it counts and Tesla adopting a city-by-city strategy looks like a Checkmate in the making chapter four the robo taxi Army a city-by- city strategy is powerful but it begs the question where does this Robo taxi Army come from the answer lies in Tesla's unique position as both a car maker and a tech company to dominate Uber's top markets Tesla doesn't need to match their Global Fleet they just need to focus on key cities New York City for instance has around 990,000 uber Vehicles San Francisco might have 50,000 while Phoenix could be operating with about 20,000 other major markets like London Los Angeles and Chicago likely Fall within this range however these numbers are misleading as some drivers are only occasional a more important metric is the number of Uber cars available during rush hours which is roughly half the number of drivers for example San Francisco has around 20 to 25,000 Uber drivers active during rush hour La Chicago and Toronto numbers are even smaller before we start calculating how much it would take Tesla to build and field these cars let's count the cars it gets for free as explained in my previous video Tesla's leases don't have a buying option so in 2025 Tesla should take hold of roughly 24,000 Off Lease model 3s and y's in the USA alone Fielding these for robo taxi duties is just moving assets from one line of the balance sheet to another and should cost the company next to nothing so Tesla should have enough free cars to cover San Francisco without spending a dime on production but where do they get cars to cover the other cities first off every Tesla on the road is a potential soldier in this war with a simple over-the-air update any compatible Tesla could join the robo taxi Fleet owners could opt in letting their cars earn money for them when they're doing other things it's like uber meets Airbnb adding cars to Tesla's Fleet no assembly required but off lease and user owned cars are not enough to challenge Uber so what about the cars that still need to be produced wouldn't building them bankrupt Tesla let's say that for starters Tesla needs $ 100,000 cars at $50,000 a pop that would mean spending $5 billion for just a few cities right not exactly because first the current base model 3 only costs Tesla around $32,000 and a cyber cab should cost significantly less as production of the purpose-built Cyber cab ramps up these inexpensive dedicated Robo taxis will become the backbone of Tesla's Fleet and here's where it gets interesting because Tesla's factories aren't just churning out cars they're printing money each Robo taxi that rolls off the line is a revenue generating asset the economics are mind-boggling Uber's average revenue per car is around $120,000 annually of that Uber Pockets about $30,000 while the driver takes home $90,000 not bad right now listen to this Uber investors like Bill Gurley and Brad gersner assume Robo taxis will earn less but as usual the experts are wrong as I showed in my previous video Tesla's Robo taxis are poised to earn significantly more because besides doing rides they will earn money even when parked during off peak hours this Aid driven approach allows for dynamic Fleet Management Robo taxis can reposition themselves based on predicted demand ensuring there's always a car nearby when you need one it's not just about having a lot of cars it's about having them in the right places at the right time and let's not forget the charging infrastructure Tesla's supercharger Network already extensive could be expanded and optimized for robotaxi use imagine a fleet that never sleeps with cars rotating through charging stations during off peak hours ready to hit the road when demand spikes when just sitting idle the cars can charge or earn money as part of Tesla's virtual power plant doing grid support they can even do distributed computing such as crypto mining the possibilities are endless and let's not forget that without a human driver operational costs plummet but let's be conservative Let's ignore these revenue streams with ride hailing duties alone each model 3 Robot taxi should earn roughly twice its cost annually in pure profit this means that each car produced would cover its cost within a few months of operation and then continue operating for several years earning huge software like margins it's a Snowball Effect each car added to the fleet not only pays for itself but gener Ates Capital to expand further it's not just growth it's exponential growth this isn't just a ride hailing service it's a self-improving self-expanding transportation ecosystem each car added to the fleet makes the whole system more efficient more profitable and harder for competitors to catch up this isn't just disruption it's economic Warfare Tesla is not just entering the ride haing market they're redefining it every Robo taxi deployed is another nail in Uber's coffin Uber is counting cars but Tesla they're building an army and in this war the robots are winning chapter 5 Uber's downward spiral as we've seen Tesla's multi-pronged strategy from leveraging X as a ride hailing platform to building a self-expanding robo taxi Fleet sets the stage for a dramatic reshaping of the ride hailing industry now let's explore the potential Fallout for Uber as this plan unfolds as Tesla's Robo taxi Fleet grows Uber faces a perfect storm it begins with a PR War Tesla's lower operational costs allow them to undercut Uber's prices significantly Uber is forced to lower fairs to compete eating into their already thin margins to utilize their Fleet Tesla's off peak rates would be extremely low not much higher than the cost of electricity and keeping the cars clean this price drop triggers a Cascade effect with fewer rides and lower fairs fulltime Uber drivers start seeing their incomes plummet with very few off- Peak rides drivers shift to working peak hours only many shift to part-time or leave the platform entirely seeking more stable employment some even switch to Tesla either as Robo taxi owners or in other roles supporting the growing Fleet in a way Uber is forced back to its Origins where Private Car owners took passengers when these were headed in the direction they were personally heading as experienced drivers leave Uber's service quality takes a hit Riders start noticing longer wait times less reliable pickups and potentially lower quality drivers the smooth professional experience that built Uber's brand begins to erode just as Tesla's service takes off the problem compounds during peak hours with fewer full-time drivers Uber struggles to meet demand when it's needed most Rush Hour becomes a nightmare for both Uber and its customers meanwhile Tesla's AI driven Fleet smoothly scales to meet demand spikes faced with longer weights and inconsistent service Uber users start experimenting with Tesla's Robo taxis some find it through their X account others try it by Word of Mouth many try it out just for the kicks of riding in one of these new autonomous cars that just flooded the city many find the experience Superior consistent clean and costeffective slowly but surely customers begin to migrate this creates a vicious cycle for Uber fewer customers mean even less work for drivers accelerating The Exodus this leads to even worse service driving more customers away it's a downward spiral that's hard to break starting in key cities the very ones Tesla targeted first Uber's market share begins to erode rapidly they're forced to spend more on driver incentives and customer acquisition further straining their finances but it's like trying to plug a leaking Dam with their fingers for every problem they solve two more appear as the situation worsens investors start to panic Uber's stock price begins to fall making it harder for them to raise Capital to fight back against Tesla's incursion Financial pressure mounts limiting Uber's options for a Counterattack a few days ago rumor spread that Tesla is delaying its 88 robotaxi day to October and on this rumor alone Uber andyt stocks both jumped 5% if this happens when most analysts think Robo taxis are years away imagine how hard Uber's stock will crash as Robo taxis start filling us and Global Roads and Revenue starts falling adding to their wos Regulators take notice with drivers leaving on mass questions arise about Uber's business model and treatment of workers legal and compliance headaches add to the mountain of problems Uber faces perhaps most damaging is the shift in public perception once seen as Innovative disruptors Uber starts to be viewed as outdated compared to Tesla's high-tech Robo taxis the brand that once represented the future of Transportation now seems like a relic of the past this downward spiral Could Happen surprisingly quickly in the gig economy Network effects work both ways just as Uber once grew exponentially by attracting drivers and Riders they could shrink just as fast if the balance tips the other way Uber's Only Hope might be to Pivot rapidly perhaps partnering with other automakers to develop their own autonomous Fleet but with Tesla's Head Start in Ai and electric vehicle production catching up would be a Monumental task in the end Uber might find itself disrupted by the very type of technological innovation it once used to upend the taxi industry it's a stark reminder that in the world of tech today's disruptor can quickly become tomorrow's disrupted as Tesla's Vision becomes reality we're not just witnessing the potential fall of a ride haing giant we're seeing the birth of a new paradigm in urban transport ation one where AID driven electric vehicles don't just replace taxis but fundamentally alter how we think about car ownership City Planning and Mobility itself in a paradigm where cars are far more than just cars they are shape-shifting autonomous robots which Moonlight as grid support batteries compute platforms and a host of other uses the road ahead is clear Tesla isn't just aiming to compete in the ride hailing Market they're entirely rewriting the rules of the game and in this new world Uber Playbook might just become obsolete as we wrap up this deep dive into Tesla's potential disruption of the ride hailing industry one thing is clear the future of urban transportation is on the brink of a revolution but what do you think is Tesla's strategy foolproof or does Uber have an ace up its sleeve are Bill Gurley and Brad gers are right that despite losing the driver Tesla's margin should only be slightly higher than Uber's or are they missing the big picture let me know your thoughts in the comments below if you like this video please like And subscribe and without patrons this channel wouldn't be possible so please consider supporting me on patreon.com/crashcourse [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music]
