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Tesla front seat
Tesla shows off a configuration for a Robotaxi front seat without a steering wheel. (Tesla via YouTube)

Tesla’s billionaire CEO, Elon Musk, laid out a vision for a huge fleet of self-driving electric vehicles that owners could share with friends or other riders, with Tesla getting a cut of the proceeds.

The Robotaxi concept relies on the ability to make Tesla cars fully autonomous, to the point that the steering wheels can be removed.

“By the middle of next year, we’ll have over a million Tesla cars on the road with full self-driving hardware, feature complete, at a reliability level that we would consider that no one needs to pay attention,” Musk told investors at Tesla’s headquarters in Palo Alto, Calif.

Musk acknowledged that the timetable could be in flux, due to regulatory concerns as well as his tendency to get overly optimistic about timetables.

He pointed to Tesla’s past achievements, including the creation of the all-electric Roadster, Model S, Model X and Model 3, as well as its production of solar roofs for power generation and battery packs for personal and grid-level energy storage.

“Only criticism, and it’s a fair one, [is that] sometimes I’m not on time,” Musk said. “But I get it done, and the Tesla team gets it done.”

Based on Tesla’s market performance, Musk might still have some convincing to do: During today’s trading, share prices declined nearly 4 percent, to $262.75 per share, and drifted in after-hours trading during Tesla’s Autonomy Day webcast.

The downturn had more to do with other concerns, including a downgrade in Evercore’s market outlook and this week’s expected news of first-quarter losses. Nevertheless, the trend underscored the view that Musk’s Robotaxi plan wouldn’t be a slam-dunk.

The concept would let Tesla owners make their car available for others to drive when they’re not using it, through a smartphone-based app system that matches up cars with riders. Tesla and the owner would share revenue from the ride.

Tesla estimates that the cost to run a Robotaxi would be less than 18 cents per mile, compared with 62 cents per mile for U.S. ownership cost and $2 to $3 per mile for traditional ridesharing models.

The fact that no driver is required is key to the financial formula. During the Autonomy Day presentation, Tesla engineers spent most of their time laying out the case for expecting that their computer-vision system would satisfy the requirements for full autonomy within the next year or so.

Tesla cars that were built since October 2016 would be eligible for over-the-air upgrades to full autonomy, but not cars sold before that time, Musk said. “Unless it’s designed in, it’s not worth it,” he said.

Musk said he expected full autonomy to transform the automotive market within two or three years. “Once regulators are comfortable with us not having a steering wheel, we’ll just delete that. … The probability of the steering wheel being taken away in the future is 100%. Consumers will demand it,” he said.

In an online analysis, Cornell University computer scientist Bart Selman said that’s debatable. Selman said Tesla may face an “extra level of difficulty” because it’s aiming to get to full autonomy by relying primarily on computer vision without including a lidar laser-scanning system.

There’s a broader issue as well: Statistically speaking, self-driving cars may eventually become much safer than human-driven cars — but could conceivably fall prey to unusual accident scenarios that humans would easily avoid, such as running into the side of a turning truck. “The question then becomes whether society will choose the greater overall safety level over the risk of having certain types of ‘non-human’ accidents occur with some regularity,” Selman wrote.

Elon Musk
Tesla CEO Elon Musk discusses the Robotaxi concept. (Tesla via YouTube)

Other questions had to do with the business model for Robotaxi. Musk said Tesla would operate its own on-demand cars in areas where there weren’t enough to serve the market. He noted that Tesla’s leased cars will not be available for purchase when the lease expires, and that those cars would be reclaimed for Tesla’s fleet.

One analyst asked about a scenario in which Tesla owners worked out their own car-sharing schemes. That led Musk to point out that a clause in Tesla’s contract forbids drivers to do ride-sharing outside Tesla’s own network. But couldn’t drivers work out a car rental arrangement? “Seems easy,” the analyst said. “OK …” Musk replied.

Musk also acknowledged that Tesla, and not the car’s owner, would probably be held responsible for any accidents or injuries caused by Robotaxis. “The right thing to do is to make sure there are very few accidents,” he added.

Will regulators go for the idea? That may well be the multimillion-dollar question for Tesla. “We won’t have regulatory approval everywhere, but I’m confident we’ll have regulatory approval somewhere,” Musk said.

Even assuming that full autonomy wins regulatory clearance, Tesla would still face formidable competition from the likes of Uber, Lyft, Alphabet’s Waymo venture and GM’s Cruise subsidiary. Ford and BMW are also joining the fray.

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