, November 30, 2021

Tesla propels Transport as a Service and gets a trillion dollar valuation


  •   2 min reads
Tesla propels Transport as a Service and gets a trillion dollar valuation

Both Hertz and Uber have been busy ordering Teslas, Tesla as a service is emerging, and it is the shape of things to come.

When the upfront cost is high but the running cost low, folks look to share and pay as they go. This is why the cloud model is so successful— it has transformed IT, turning it from an overhead to a variable cost, something you can make hot or cold and turn on and off like a kitchen tap. Software as a Service (SaaS) has likewise become the standard way most of us buy software. Maybe movies and box sets on demand are much the same — isn’t that why Netflix has taken off, and video sales crashed to near zero.

Now it is happening with electric vehicles. Hertz has ordered 100,000 Models 3 Teslas; “How do we democratize access to electric vehicles? That’s a very important part of our strategy,” Mark Fields, Hertz interim chief executive, told Bloomberg. He added: “Tesla is the only manufacturer that can produce EVs at scale.”

Hertz has found one fairly substantial customer already; Uber is renting around half of the Hertz Teslas.

Are Tesla shares cheap?
Shares in Tesla are moving close to a new all-time high, but there are good reasons to think Tesla’s shares can rise much further.

Of course, EVs are the future and Hertz, not long out of bankruptcy, is just trying to prepare for that future.

EVs are also cheaper to run than internal combustion engine cars — it is not just the cost of charging versus petrol/gas; EVs have fewer moving parts; there is less to go wrong.

EVs are a kind of segue between traditional cars and autonomous cars

As James Jeffs from EDTechEx, told Techopian in a recent interview - during the testing of autonomous cars, the miles were driven between disengagements (when the safety car takes over from the autonomous features) has been doubling every year since 2015. If this exponential rate continues, autonomous cars will be as safe as cars driven by humans by 2024. Considering that a lot of those disengagement’s occurred in cars that were about to crash, this point of parity might even occur in 2023.

When autonomous cars begin to gain traction, it will in all likelihood be operated and utilised through the Cloud  — transport as a service, TaaS. Tesla is a leader in autonomous vehicle development and through Starlink (high-speed, low-latency broadband internet across the globe) it will be able to leverage the communications network needed to run an autonomous vehicle transport system.

By all means, argue that Tesla and Uber are overvalued, maybe they are, especially Uber, but if the argument ignores the potential implicit in TaaS, the dismissal of these valuations has no credibility.

Tesla isn’t a car company
Tesla isn’t a car company. It’s a software and AI company that could yet benefit from the auto equivalent of the cloud.

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