What is More Valuable Than Tesla FSD Robotaxi? Robotrucks.

Tesla FSD is making huge progress on a weekly basis. Like all AI products like Open ChatGPT and the chess and Go AI programs this will continue. Those looking at the nearterm are looking at take rates or percentage of Tesla buyers who buy Tesla FSD. Those looking out are looking at Robotaxi but I see something that is not only more valuable than Robotaxi, it will also have a faster transition. This is Robotruck.

Near Term FSD

Stock Analyst Gene Munster estimates that only about 5% of new Tesla buyers either purchase or subscribe to FSD. If that number goes to 20% in 2026, the incremental 15% of subscribers would add about $1.1B to revenue and close to $1B to net income. Rough numbers are the increased adoption would add about 8% to net income in 2026. Given the waterfall nature of the subscription business, that benefit would compound going forward. In 2027 the benefit to net income would be around 15% and 21% in 2028.

Genes quick analysis is flawed. The other aspect of a fast learning FSD software is that Tesla will have a clean introduction into China, Asia and Europe. Also, Tesla will be able to get more of the old fleet of Tesla owners to adopt FSD. There are twice as many old Tesla as new Tesla sales. A 15% adoption rate in older Tesla would provide $2 billion in net income over 2024-2026.

If the software continues to improve and gets safer than most human drivers, then bundling with insurance could get adoption rates up to 50% or more.

Robotaxi Revenue

Robotaxi would need regulatory approval and customer adoption. Currently, people using Uber, Didi and Taxi are generating $200 billion per year in revenue globally and could become $300-400 billion by 2027-2030. It would take time for Tesla robotaxi to get launched, get market share and grow the market.

Robotrucking

Robotrucking will be more impactful than Robotaxi in many ways. If truck drivers are replaced for all 30 million large trucks and perhaps another 100 million small and medium sized commercial trucks in the world this will transform the supply chain.

There are 3.6 million truck drivers in the USA. There are 20 million truck drivers in China and 20 million truck drivers in India. There are about 5-6 million truck drivers in Europe.

The transport costs in the supply chain could eventually be reduced by 80% or more. Driving speed for delivering cargo could increase from 55 mph to 110 mph or more. Also, the robotruck could drive 23 hours a day and only stop for recharging.

Truck fleet owners will not hesitate to replace human drivers once the systems are good enough. 70% of drivers could be replaced once there is a driving system that could safely platoon trucks. Platooning trucks involves robotic trucks following a lead human driver.

As stated before, Tesla’s AI team recently announced that the software can train with Youtube videos of driving. This means the system is independent of camera positions. $150,000 semi trucks can get cameras and self driving computers added for about $40,000 per year plus the hardware. This means the existing fleet can be rapidly converted to remove the driver for a 4-12 month return on investment.

$40,000 per year made on all 30 million trucks would be $1.2 trillion per year. This would be about one hundred times the current profits at Tesla.

It would take 3 years to get regulatory approval and then 2-3 years to make and install all of the camera and driving hardware retrofit kits. Tesla would also ramp up the electric Semi.