How Much Can Tesla Make On Its Robotaxi Business?
Breaking down Tesla's robotaxi revenue projections
Let’s get something straight …
Selling cars ..
Electric or Gas
Is a shit business.
Complete dog shit.
But if the cars can drive themselves … that’s a different story.
That’s why this week was a big deal for Tesla.
In fact, if Tesla TSLA 0.00%↑ can pull off the Robotaxi
It could stop selling cars forever.
Tesla's initial Austin, TX robotaxi pricing provides some clues to the strategy:
Cost: $4.20 per ride
With an average trip being about 6 miles..
That works out to roughly $0.70 per mile.
Already undercutting Uber and Lyft.
But here's where it gets interesting.
Elon Musk has projected that at scale, Tesla Robotaxis could charge just $0.30 to $0.40 per mile.
Compare that to:
Uber/Lyft: $1.00-$2.00 per mile
Waymo: $1.66-$2.50 per mile
Even if Elon Musk is wrong about price (which is likely) - Tesla has a compelling product at a good price.
But how much can Tesla make?
The Economics That Change Everything
Here's the math that keeps Uber UBER 0.00%↑ executives awake at night:
Revenue Side:
Target pricing: $0.40 per paid mile
Utilization rate: 60% (meaning 60% of miles driven have paying passengers)
Revenue per mile driven: $0.24
Cost Side (per mile driven):
Vehicle depreciation: $0.06 ($30,000 Cybercab over 500,000 miles)
Insurance: $0.05 (lower due to autonomous safety)
Charging: $0.04 (electricity vs. gasoline)
Maintenance: $0.03 (electric vehicles need less)
Fleet management: $0.02
Total costs: $0.20 per mile
Based on these assumptions:
Net profit: $0.04 per mile driven
That might not sound like much until you realize the scale we're talking about.
The Trillion-Dollar Math
A single Tesla Robotaxi driving 100,000 miles per year would generate:
Revenue: $24,000 annually
Costs: $20,000 annually
Net profit: $4,000 per vehicle
Now multiply that by Tesla's projected fleet size.
If Tesla deploys 1 million Robotaxis …
That's $4 billion in annual profit from transportation services alone.
To provide you some context - Tesla has generated $6B in net income over the past 12 months.
How Tesla Can Dominate
Tesla has the ingredients for profitable autonomous transportation:
Vertical Integration: Tesla builds the cars, batteries, charging infrastructure, and software
Manufacturing Scale: Already producing 1M+ vehicles annually
Customer Fleet: Tesla’s existing customers could scale the operation faster (and reduce some cost for Tesla) by allowing their cars to drive in the fleet.
Data Advantage: Every Tesla on the road feeds data to build/improve the autonomous system
Cost Structure: Electric vehicles have minimal maintenance requirements
The Bottom Line
At my conservative profit estimate of $0.04 profit per mile, Tesla's Robotaxi business could generate hundreds of billions in revenue over the next decade.
More optimistic scenarios suggest even larger opportunities.
Needless to say, some of this is already priced into Tesla stock.
So it’s up to the company to execute on the rollout of the fleet.
Hope all is well!
Colin
PS: Can you do me a favor? Share Equity Empire with a friend - it really helps spread the work we do here. Thank you!!