A Tesla ride-hailing service will face some serious challenges (TSLA)

A Tesla ride-hailing service will face some serious challenges (TSLA)

tesla model 3YouTube/Motor Trend

Tesla, which is inarguably the greatest electric-car company in the history of the automobile, has watched over the past few years as its thunder has been stolen by the next big thing: massive-scale ride-hailing companies such as Uber and Lyft.

If self-driving vehicles arrive in the next five or so years, Tesla has a real problem: Uber’s $60-plus-billion valuation will rocket even higher (no drivers mean more profits) and Tesla will struggle to catch up. 

Tesla, of course, is advancing its own Autopilot technology, which is currently the most advanced semi-autonomous system that consumers can buy and use. The company is also equipping all of its vehicles with the necessary hardware to enable level four autonomous driving. So clearly, Tesla doesn’t intend to fall behind its self-driving competitors and given the sheer number of Autopilot miles driven, the company could actually have a substantial commercial edge in the autonomous space.

But Tesla is also aiming to join the ride-hailing party with its so-called Tesla Network, which according to CEO Elon Musk, will aim to enable Tesla owners to “monetize” their ownership when they aren’t driving their vehicles. The cars will be available to be rented out, in a manner of speaking. 

At Seeking Alpha, Tesla long investor “Galileo Russell” sums it all up in an interesting post, pointing out that Tesla has restricted owner revenue-making from their Autopiloting vehicles to the Tesla Network — a walled garden of sorts that sets Tesla up to capture some of that revenue rather than giving it all to owners.

In terms of enterprises such as Airbnb, with people turning their apartments into de facto hotel rooms, this has led to a lot of business activity, exciting the whole sharing-economy idea.

Don’t touch my Tesla, bro!

But there’s a big issue with Tesla jumping into this space.

I’m not sure anybody would want to share their Tesla.

Certainly not current owners who have spent on average $100,000 on a vehicle. And I’m not convinced that changes when you have the $35,000 Model 3 in the picture. Firstly, because it might cost more than $35,000. And secondly, because sharing a car is inherently risky. Very risky.

No one is going to total your apartment, although Airbnb-ers have certainly experienced misbehaving and destructive guests. Your Tesla is another story.

Sharing a vehicle that costs more than $40,000 is also dicey because even though you can make some money off an asset that’s otherwise parked in your driveway, you have to deal with the unpredictable schedules of others as well as the additional yearly miles driven. Tesla’s hold their value quite well, relative to other used cars, but ideally you want your used car to be as gently used as possible when it comes time to sell it or trade it in.

A lot of miles on the odometer can undermine that, even if those miles put money in your pocket.

There’s also the “Keep your hand off my Tesla” factor. If you had put down $1,000 to pre-order a vehicle, as 373,ooo people did when the Model 3 was revealed in early 2016, and waited patiently more than two years to get your car, how good would you feel about loaning out your baby?

Musk and his team are clearly thinking economically when they think about the Tesla Network. But they might be thinking about how people really own cars — especially Teslas, which have around them a Ferrari-like halo of desirability.

Indeed, the arrival of the Model 3 could shift this dynamic. But it will have to be a pretty big shift.

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