Elon Musk's new frontier - turn electric car valuations on their head | The Driven
Elon Musk unveils the Model 3

Tesla CEO Elon Musk is not content with turning the business model of the auto industry upside down, and changing forever the driving experience of electric vehicles. He now wants you to believe that the value of your EV will increase rather than decrease after you buy it.

There are two important caveats to this: One is, that EV has to be a Tesla, of course. And two, it needs to have the ability for Full Self Driving, or FSD.

Musk’s reasoning, first mooted in detail at its autonomy day earlier this year, is that a car that requires no human intervention to drive can be used significantly more often than one that needs someone at the wheel.

It’s not a completely new idea. Stanford university’s Tony Seba has been predicting that by 2030, most – or many – people will not own their own cars because they will be fully autonomous and widely available.

And the fact that these cars can be used 15-20 hours a day will make transport very cheap, an average trip at the cost of a cafe latte, Seba suggests, because the costliest part of car transportation is the one off investment in the vehicle itself and the ongoing expense of a driver.

Musk’s vision is a variation of that. He is inviting Tesla car owners to think along these lines: Buy a Tesla now (for around $A70,000 for a Model 3, or more than $A100,000 for the Models S and X), and you will see the value of that car increase, if it has FSD, and autonomous driving becomes a reality.

He proposes a Tesla version of Uber, or Lyft, where the company will run autonomous cars, or robo-taxis, using either company-owned vehicles or privately owned Teslas. The income earned from making the Teslas available will lead to a significant increase in value, maybe even a doubling.

In a series of Tweets on Tuesday (US time), Musk doubled down on that prediction, suggesting that the value of a Tesla with FSD could be between $US100,000 to $US200,000, because the use or utility of that vehicle increases from around 12 hours a week to 60 hours a week.

Of course, you need to have FSD in the car. Right now that costs around $6,000, and Musk overnight tweeted that the cost would rise by $1000 in August, and would continue rising in future.

FSD is not actually a thing, just yet. Well, it is, because billions of data points accumulated from Tesla over the last six years have made it possible.

Tesla is using this to develop its own system based around cameras, rather than Lidar favoured by other car companies.  Analysts say that if Tesla gets this right, then the technology will be a fraction of the cost of the Lidar rivals.

According to Tesla, its FSD is already twice as safe as human driving, but of course that’s not yet at the level of accuracy and safety that would be allowed on the road by regulators, or tolerated by the public. Musk, however, is promising that it will be by the end of next year.

Most people are not convinced by the argument that Tesla’s will increase in value. But Musk insisted.

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