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Why Elon Musk’s Genius Tesla Strategy Will Make Lyft & Uber Obsolete

Why Elon Musk’s Genius Tesla Strategy Will Make Lyft & Uber Obsolete

elon musk tesla network

CEO Elon Musk envisions a future where autonomous vehicles will generate passive income for Tesla car owners. Uber and Lyft’s businesses may be at risk. | Source: AP Photo/Ringo H.W. Chiu

By CCN: Imagine a world where your autonomous vehicle drops you at the office. Instead of driving to the parking lot, it speeds off to pick up its first passenger of the day. You go about your day while your self-driving car generates passive income. When you’re ready to go, you summon the vehicle to take you home. This is the future that Elon Musk envisions, and it is going to happen sooner than you think. To put it simply, Tesla will render Uber and Lyft obsolete.

Tesla – Not Uber or Lyft – Will Win the Rideshare Wars

tesla network uber lyft

Tesla will emerge the surprise victory in the ongoing rideshare wars. | Source: AP Photo / David Zalubowski (i), REUTERS/Lucy Nicholson (ii). Image Edited by CCN.

Sometimes, being first does not guarantee victory. This is a painful lesson that Uber is about to learn. This is because Tesla CEO Elon Musk recently unveiled his master plan to take over the ride-hailing business.

The strategy is simple: build a ride-hailing network where Tesla owners can add or subtract their autonomous vehicles to the fleet. Cars added to the Tesla network will be part of a fleet that autonomously picks up passengers and transports them to their destination while you work or take a vacation. When you need your car back, you can simply subtract it from the network and summon it to your location. According to Musk, car owners will keep as much as 75 percent of the revenue.

The model sounds very attractive to car owners. They have absolute control on when to share their vehicle. On top of that, the passive earnings can help ward off the repo man.

Tesla Network Elon Musk robotaxi

Benefits of adding your car to the Tesla Network | Source: YouTube

Elon Musk’s Big Announcement

This might sound like science-fiction, but in the video below, Musk reveals that the network might go online as early as next year.

Musk also explained how the combination of the business models of Uber and Airbnb would put Tesla ahead of the competition and secure their position as a long-term leader in the business.

“There will be Tesla dedicated cars for ride-hailing and any customer will be able to share their car at will, just like you share your house in Airbnb… so it’s a combination of those two models [Uber and Airbnb].”

Musk also noted that in cities where demand outpaces the supply of customer-owned vehicles, Tesla will run its own fleet to guarantee that you can always rely on the company to service your transport needs. On top of that, the Tesla CEO emphasized that they will have millions of cars in the field with full autonomy capability and no one else will have that.

With an attractive passive income pitch for car owners plus an army of robotaxis, it appears that the days of Uber and Lyft are numbered.

Uber and Lyft Repeatedly Shoot Themselves in the Foot

Recent developments have made it obvious that Uber and Lyft are unlikely to survive Tesla’s entry to the playing field. A global driver’s strike last week revealed a fundamental flaw in how these two companies operate. According to Business Insider, the ride-sharing firms are paying poverty wages while failing to generate consistent profits.

Uber IPO Ignites $70 Billion Rideshare Stock’s Ticking Time Bomb

— (@CCNMarkets) May 10, 2019

To stay operational, these companies are being forced to increase the average hourly rate of drivers. Currently, the rate stands at an estimated $11.77 after deductions such as company’s fees and vehicle expenses. If they do that, revenues will suffer.

This puts Uber and Lyft in a precarious situation as both firms struggle to generate consistent profits and keep drivers satisfied. Fortunately for commuters, Tesla’s network should be operational soon.

Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.

About The Author

Kiril Nikolaev

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor’s degree with a specialty in finance.Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, where he teaches people about the basics of investing.He owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

This article was edited by Josiah Wilmoth.

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