Mission Not Accomplished
Tesla's (TSLA) automotive mission statement is “to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible”. It infers these prime directives:
Promote rapid mass consumer adoption of electric vehicles
Substantially and quickly reduce vehicle emissions to fight climate change
Telsa CEO Elon Musk's fetish with autonomous driving is a big flaw in the overall strategy to achieve those goals. Shuttering and ceasing all in-house Autopilot autonomous driving development would make the company a more attractive investment by allowing the under-capitalized firm to focus resources where most needed and where results would produce more financial gain with less risk.
Autonomous Driving Has Nothing To Do With Emissions Or Helping the Environment
Nothing suggests autonomous driving features will appreciably help sell electric vehicles at this stage of EV market maturity or any stage soon to come. Autonomous driving does not make a vehicle more environmentally friendly and it certainly does not make it cheaper. It is an expensive counter-intuitive distraction for manufacturers and consumers wanting competitively priced clean energy cars.
Tesla's target customers are among the most virtuous of drivers. Their core desire is to purchase a reduced emission vehicle to combat global warming. Tesla is lucky to have such moral high ground associated with their products.
Motorists fearing a return to high gas prices are merely protecting their wallets from pain at the pump when seeking alternative fuel cars. Greenies and cheapskates have not been demanding nor seeking self-driving automobiles. And surprisingly few others are.
Who Wants Self-driving Cars?
According to a recent Massachusetts Institute of Technology survey only 13% of drivers are interested in full self driving cars. Only 14% of participants want features that relieve drivers of control part-time. Both these numbers are actually trending down from previous surveys, as MIT's graphs show.
The largest contiguous group of respondents (48%) stated they would never purchase a car that completely drives itself. MIT found most consumers are happy with the level of technology presently available and have a constellation of reasons to shy away from autonomy.
There is an important caveat to this data. No accommodation was made for our subset of environmentally concerned motorists who would rate addressing climate change much more important than a hands free joy ride.
Tesla Misunderstands Its Market
There is no solid business case for coupling autonomous driving with reduced emission vehicles. The unique selling proposition of “saving the world” via migration from fossil fuels is inherent in all basic electric cars. The vast majority of those wanting to go green would buy EV's without autonomous features. The drivetrain itself is enough to capture the sale. And the cheaper the ride, the more folks will buy.
Sure, subtracting the retail cost of Autopilot from the sticker price may speed mass consumer adoption of lower priced EV's but Tesla could also elect to enjoy larger margins instead of more unit volume. Either way, deletion of Tesla's entire corporate autonomous driving program could positively impact the bottom line. It also substantially reduces the company's financial and legal exposure. And that makes for a more appealing opportunity.
Consider these questions:
- Why is it necessary for Tesla to spend a giant pile of bills to develop such a technically challenging feature that is unneeded to achieve their corporate and environmental objectives?
- If Tesla could sell just as many units, or possibly more, without autonomous driving and make more money doing it, why shouldn't they?
- Why expose the company to the financial risk of project failure or development difficulties? Why expose investors to legal risks stemming from undelivered product promises or automobile accidents?
- Does it not make more sense to save corporate resources or divert them to Tesla's core mission?
Tesla is having difficulties learning how to be a mass manufacturer. To attempt that in concert with developing a new car with a new drivetrain and evolved battery technology is enough. The whole of the corporation's automobile division should be laser focused there and there alone.
Control Z The Whole Thing
It would be nice if there was a CTRL + Z combination on the keyboard of life, but there isn't. There is no way to undo the headaches, drama, negative media attention and legal liability Tesla's grand autonomous driving misjudgment has caused to date. There is no way to get the dollars, engineering efforts and resources back. It is only a day dream to think how much further Tesla would be towards their goals had they not dived into the autonomous driving rabbit hole. However, we know it will remain a problem unless something is done.
Without a solid business case, the company should not be developing full self driving under their roof. Market research of all drivers shows little desire for even lesser levels of autonomy. I would argue it is much less a factor in the purchase decision of one who wants to buy an EV to simply go green. Offering driver assist features comprable to low-end contemporary industry capabilities is the absolute most to consider doing to sell EV's.
In that case, Tesla should outsource the entire affair to a vendor. Tesla must become just a turnkey consumer of status quo autonomous driving technology. Tesla must become just a consumer of status quo autonomous driving technology. Firms like Bosch, Delphi, Waymo, NXP Semiconductors, Intel – Mobileye and Nvidia top a growing list of capable potential providers.
There is a small possibility that another firm may see some value in what Tesla has done internally and buy their autonomous driving unit from them. However, there has been much criticism of Tesla's autonomous plans, architecture and capabilities. So, Tesla may do well to just give it away to any takers willing to support current customers and systems.
Lemons Into Lemonade
The publicity department at Tesla is more than up to the task of fashioning a grand Ted Sorensen style statement heralding the company's refocusing on its vital mission to save the planet via sustainable transport for the every-man. Musk is no JFK when it comes to oration but the faithful will cherish every syllable, even when he tells the flock to no longer expect any full self driving Tesla cars.
Write some checks to customers. Eat some crow. Make some apologies. Get the RISK, responsibility and massive resource drain off the books.
Refocus For Rewards
Tesla CEO Elon Musk is lost in a comic book folly with severe consequences. Pursuing autonomous driving is an example of Musk as an unfocused, undisciplined, inexperienced corporate captain. Full self-driving or the current cadre of autonomous features do not and will not meaningfully increase the number of electric vehicles bought. It only increases their cost to develop, make, sell and support.
Tesla becomes a more attractive investment with fewer execution and financial risks by strategically refocusing on the mission that matters most, as originally stated. That is, to get as many folks to buy EV's as possible and to do so at a profit.
Without such strategic changes Tesla stock is a “no touch”.
Disclosure: I am/we are short TSLA.
Additional disclosure: I wrote this post myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. I'm short Tesla via a few long dated puts which amount to less than 1% of my portfolio, just for kicks. My personal position nor the content of this article should be considered a formal investment recommendation. Please do your own due diligence or consult with a broker before making investment decisions.