- Tesla and Uber are
fighting to be your go-to for
a self-driving, ridesharing
fleet of vehicles.
And the Uber CEO recently talking about
how he feels it's important to be first.
Speed to market is paramount in success,
so I thought, let's take a look
at what data we do have about this
and see if we can figure out
who's gonna win this battle.
The first thing I wanna
talk about is trust.
Now, Uber has had the
trust of its millions
of riders for quite a while now.
There are some cases
where you hear of people
being overcharged and all that,
but Uber does seem to have
the trust of a lot of people
and frankly, it's one of
the best services out there,
so people are gonna use it no matter what.
Uber has recently had some
issues in California, however,
with their self-driving program.
The DMV actually sent them a letter
stating that what they're doing is illegal
after some videos of their
cars running red lights
in San Francisco had
surfaced on the internet.
Now, Uber argued that
because they had a person
in the driver's seat
that it wasn't illegal
and they didn't wanna
apply for the permit.
Now a couple of weeks later, however,
they did cave and they actually shut down
their self-driving program
while issuing the statement
that they're now looking at
where they could redeploy
these cars but remain 100%
committed to California.
But I don't know if this is gonna affect
their reputation at all in the long run.
Tesla, on the other hand, has
had some issues in the past
when it comes to trust,
even with their owners
and the people that are a
part of the Tesla family.
And that happened back when the Model S
was first being released.
There was this whole
bait and switch thing,
it was a big fiasco, it was really bad.
But they put of lot of that past them
and now they have a
pretty strong community
of people that really
feel like they're a part
of something special
when they own a Tesla.
So, their ownership base is really strong
or really, I would say, adamant
and really enthusiastic
about their products.
But what does the market think about this?
If we take a look at the funding from Uber
and what they've been able to do,
so far they've been able to
raise about $12.5 billion
in 19 rounds of funding
from 25 different investors.
That gives them a total of
about a $66 billion valuation.
Now that is insane, that
is a giant, giant number.
That's close to the Facebook IPO
and they were just north of 100 billion.
Now, the big thing here though
is that Uber isn't really
a car company as much as it is a network.
They're just really a service provider.
They don't own vehicles,
they don't maintain the cars,
that's what their riders do.
This is how they've been
able to scale worldwide
in such a short amount of time.
Tesla, on the other hand, has some of
the more traditional problems
that car manufacturers have,
which also, I think, may
give them an advantage here.
So, if we take a look
at the data about Tesla,
just recently, they've had
a huge surge in their stock.
Now, that's just recent, and it puts them
about at a $33.6 billion valuation.
That's half of the
current valuation of Uber.
Again, Uber's a private company,
so there isn't a ton of data about
their financials out there yet.
But that being said, Tesla,
while it is the darling
of the tech industry,
or one of them, it's
very different than Uber
in a sense of how the market sees them.
Being a car manufacturer is
really hard compared to just
being an app developer and
building a social network.
So, the challenges you
face are quite different
and it puts Tesla in a different category,
at least in terms of investors' minds
when they look at it from
a public market standpoint.
Now, what about any one else?
There's GM that's doing some of this
and they're partnering with Lyft.
There's the new Faraday Future,
which sounds like it might
be going down in flames,
I don't know.
And then there's things like Lucid,
which actually is some of
the former Tesla people
that started a similar thing
and a lot of these guys
are touting self-driving
capabilities and all that.
So, are they going to enter this market
or are they just doing
self-driving as something
that is gonna give their
owners another feature?
Well, Lyft, obviously is looking
to make it a ride sharing
part of their service,
but they're so far behind,
it's really begs the
question whether or not
they'll be a factor at all.
Certainly, I don't think they're gonna be
the first ones there and
I've been wrong before,
so we'll see, but right now,
it looks like Tesla and Uber
are the real ones that
are pushing ahead of this.
There's also companies like Google,
who are really probably at
the forefront of the software
you need to actually do self-driving cars.
But are they going to do
a ride sharing service?
It seems a little not
Google-like, but who knows.
And then what about Amazon?
I haven't really heard
much from them on this,
but chances are, they're
probably working on it,
especially if this rivalry
between Elon Musk and
Jeff Bezos continues.
The next thing to think about is quality.
So, simply put, would you rather ride in
a Ford Focus or Volvo or a Tesla?
Now, Teslas aren't the
fanciest cars in the world,
as many of you have
commented on my other videos.
But, if you compare it to say, a Volvo,
which I guess is a nice
car, or like a Ford Focus,
I really don't see how
Uber comes out ahead.
Now, the one thing about that though
is that they could partner
with anyone out there.
They could partner with Mercedes or BMW
or some of the higher end, luxury cars.
I mean, honestly, if I'm talking about
just luxury, comfort ride,
I may sit in an Escalade or
some kind of fancy SUV or
something like that for my dollar.
But the point being,
Tesla certainly has decent
or I consider them really
high-quality vehicles
with really comfortable rides.
Even if you just look at
companies like Tesloop,
which provide a ride
sharing service, sort of.
It's like a car service that they take you
to from city to city in a Tesla.
Right now, I think they just
go from LA to Palm Springs,
which I would love to try some day,
but they don't come to San Diego
yet, so maybe when they do,
I'll give them a shot and
we can see how that goes.
But point being, you can have a service in
a really nice vehicle and
the cars are already nice.
You don't have to seek out
and try to find a good partner
like Uber will have to do if
they wanna compete on quality.
And the last question
about it is who cares?
Do you really care how nice the car is
that you go from here to work in?
If you do, then yeah, it would make sense.
But UberX alone really aren't great cars,
so I don't know if this
is a part of the strategy
like Travis, the CEO of
Uber, has said it should be.
So what about price?
Well, with price, I think Uber
is gonna be hands down the winner.
In fact, a report that came out recently
said that an autonomous taxi or
a self-driving ridesharing
vehicle would be
about 35 cents per mile
compared to the close to
three bucks per mile that
you may pay right now.
$2.86 was the comparison
there in San Francisco.
So that is tremendously cheaper
and it makes a lot of sense
because the most expensive thing
about an Uber is the driver.
Now, how does it make
the drivers feel, though,
if the company that you work for
is basically trying to get rid of you?
Well, it probably shouldn't
feel that unfamiliar
because that's basically what companies
have been doing since the
Industrial Revolution.
But, point being, that the cost is gonna
come down tremendously for these rides.
Now Tesla is more tied
to this ownership model.
They're not really interested
in ride sharing revenue
as they are as helping people
offset the cost of ownership.
There's been a lot of studies out there
and it makes sense if you think about it.
90% of the time your car is
either sitting in your garage
or at work or wherever you park it.
It's really not doing anything for you
so it's basically a horrible investment,
even if it has low maintenance costs,
high resale value and all of those things.
None of that really matters since the car
is just sitting there
a majority of the time.
So if you could do something about that,
that would be really helpful and
that would help Tesla's
model continue to thrive.
So Travis Kalanick, the CEO of Uber,
recently said, that, "If
we are not tied for first,
"then the person who is in first,
"or the entity that's in first,
"then rolls out a ride-sharing network
"that is far cheaper or far
higher-quality than Uber's,
"then Uber is no longer a thing."
I think what he's trying to say is
basically that if they don't do this,
then someone else is going
to and they'll be gone,
which means to their
investors that they'll be
losing all that money,
which they don't wanna do.
They know it's imperative.
If they don't do it, then
someone, Tesla perhaps,
is gonna do it and they're
just gonna eat their lunch
and dominate the market and
Uber will kinda fade away,
as many other companies have when
a new entrant has come,
really figured something out.
I mean, think about Friendster.
No, I didn't think so.
Okay, so, the last part of
the equation here is speed.
So, speed to market, this
is one of the key things
in business when you wanna compete.
The way they're doing it is
they're putting all the hardware
in all the new cars, that
includes the Model 3,
will have the capability
to be fully autonomous
and have what they're
calling the Tesla Network,
the idea where I can sit at home,
push a button on my phone, send a car out,
and have it make me money and come back.
Hey, that's pretty sweet.
I think that's a good argument to be made
that they are really killing
it or they are gonna be first
to market in this space of
this autonomous taxi business.
In 2016, Tesla will get close
to 200,000 cars delivered
and in 2017, with a gigafactory online
and the Model 3 deliveries beginning,
they should beat that
number pretty easily.
Now, for 2018, they said they're
aiming to deliver 500,000 cars.
So, if we take just those two years
and give them an 80% chance
of hitting those numbers,
they're looking at about
560,000 cars on the street
that could become self-driving with
a simple software upgrade.
No one is even close to getting
this many cars in the market,
so we'll see how long Tesla waits to
actually launch their Tesla Network,
considering they'll have
such a big headstart.
When it comes to the money
that they're spending, too,
Tesla hasn't really turned
much of a profit yet.
They did in Q3 of this year,
finally, which was great,
but the reason they
don't, and a lot of people
hate on them for this, is that they spend
all their money on
research and development.
Not turning a profit doesn't
mean you're not making money.
For anyone that's unfamiliar with that,
not making a profit means
that you're doing something
with that money, hopefully to
push your business forward.
Remember, Tesla's an auto maker.
They're competing with GM
and Ford and Volkswagen
and these huge, huge companies that
have been around for hundreds of years.
They need to continue to innovate
and really invest every
dollar they can in that,
which is why they've been
basically running at a loss here
and spending all their money in R&D.
So in 2015, Tesla spent just over
$700 million in research and development.
So, if you compare that to Uber
during that same time frame,
it looks like they estimated
around 200 million.
So Tesla's tripling their spend in R&D.
They are just killing everybody
when it comes to innovating.
Now, granted, Uber doesn't
really have much to spend R&D on.
They have an app, which
they've pretty much mastered
and then they have to now
do the self-driving thing,
so the cost of what they're
spending their money on
would probably be far less,
considering Tesla has to
figure out things like
how to manufacture cars,
how to make batteries, how to do solar,
how to do all this stuff and
all the crazy stuff that they're doing.
So, they have a much
bigger kind of a plate
that they have to work on
versus Uber's very kind of
much smaller focus, even though
it's a much broader scale.
Now, Uber doesn't make cars, remember,
and they said that they won't make them.
That means that they have
to partner with somebody
and that they have to use the
strength of their network.
Now, the challenge there is whether
or not that that will be enough.
Because if you think about
it, if cars were a commodity,
if there were a dozen manufacturers
all selling cars that were self-driving,
yes, Uber's strength of
the network would win.
But that's not the case.
The only company that really is
putting out cars that
are gonna be self-driving
in the next couple years is Tesla.
Yes, Google probably has the edge on them
when it comes to the
software and maybe testing
and they're a bit better, but
how many cars has Google sold?
Is that really Google's model?
I don't think it is.
Other than the phone, recently,
they're not really a
hardware manufacturer at all,
so I don't even know if
that's in the cards for them.
So, Tesla, really has the edge on this,
but Uber could come back, if and when
those cars become a commodity.
So, let's think about
that for a second, though.
Tesla isn't a ridesharing company.
This was kind of a late
game, fourth quarter decision
to try to actually compete
with this idea of de-ownership
or people not wanting to own cars anymore,
which is certainly a strong headwind
for them to try to face.
So, their model is built
around you owning a car.
And Tesla's Network,
this ridesharing service
called the Tesla Network,
is really just there
to offset the cost of ownership.
So, it's not Tesla versus
Uber, as Elon Musk puts it,
it's the people versus Uber.
All right, so tell me, who's
gonna really win this, though?
Do you think it would be Tesla,
with the Tesla Network and
the hundreds of thousands
of self-driving cars out
there and owners like me,
pushing buttons and sending
our cars out to make us money?
Or will it be Uber, that
friend that's got you home,
drunk from the bar, time and time again?
And their partnerships with companies
like Volvo or GM or anyone else.
Or is it someone I
haven't even thought of,
like Faraday Future or
Lucid or someone else?
Let me know in the comments below.
I love your feedback on this and
all these other comparisons that I do,
as well as any other ideas
you have for future videos.
So please leave 'em in the comments.
I'll reply and we can have a conversation.
I really do appreciate it.
So thank you so much for watching
and I'll see you back here next time.
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