Cheaper than bus tickets: Musk says FSD to deliver “biggest increase in asset value” in history

Elon Musk has predicted that Tesla will achieve Full Self-Driving this year, and that the product will deliver the biggest increase in value ever seen in any asset class in history.

The bold comments were made during the electric vehicle, software and energy storage company’s Q4 2021 earnings call, where the Tesla boss outlined the company’s record-making year which saw it increase sales by 87% while other carmaker sales shrunk, mostly due to supply chain issues.

Musk called 2021 a “breakthrough year” for the company, which saw it record a $US5.5bn ($A7.7bn) GAAP net income even after spending up a big $US6.5bn ($A9bn) on new factories in Austin, Texas and Berlin, Germany and other capital costs.

Musk said he expects 2022 will be even better, and it is now clear that EV companies can be more profitable than internal combustion car makers. “There should no longer be doubt about the viability and profitability of electric vehicles,” the company said.

Musk expects “comfortably above 50% growth” for 2022 of the back of 936,000 deliveries in 2021 – and his forecast for the company goes far beyond that with the release of Level 4 autonomy, perhaps even by the end of 2022, now in the EV maker’s sights.

Musk’s thinking behind self-driving cars is that they will not only give owners the ability to recoup the financial investments on their vehicles, but it will also increase utilisation of the resources put into making a car by five.

“Everything pales in comparison to the value of a robotaxi or full self-driving,” said Musk.

“I mean … it just tends to overwhelm everything. Just going from having an asset that has a utility of … 12 hours a week per passenger car to maybe around 50 or 60 hours a week, so a (five times) increase in the utility of the asset cost and change.

“That’s where … it just kind of blows your mind,” he said.

Musk’s comments are significant, because Tesla is already delivering the biggest profit margin per vehicle than any other car maker, but it – and a growing number of analysts – say future profits will be driven by software rather than hardware, and driving as a service rather than sales.

Some futurists predict – like Stanford’s Tony Seba – have predicted that many people won’t own their own cars by 2030, and Morgan Stanley is forecasting the bulk of earnings growth to come from software and service “additions”.

With 60,000 cars now in the company FSD beta program, Musk is certain of the success of Full Self-Driving and of the company’s financial future.

“It’s great, actually, if you run the numbers on robotaxis, it’s kind of nutty,” he said.

“It’s nutty good from a financial standpoint. And I think we’re completely confident this point that it will be achieved. And my principal guess is that we will achieve full self-driving this year.”

Musk’s comments on the earnings call follow a recent increase in the price of the company’s Full Self-Driving suite in the US.

As forecast by Musk in past earnings call that the FSD package price would increase as it moved towards becoming a “feature-complete” product, the company raised the price from $US10,000 to $US12,000 in mid-January. (Australian pricing remains at $A10,100).

At the same time, the company’s FSD beta program is under review by the Californian authorities as to whether it should be subject to the state’s autnomous driving rules.

But this did not seem to bother Musk in the slightest.

Instead, he pressed home the opportunity that Tesla’s self-driving software suite will provide in the form of low-cost transport to non-drivers so much so it could cost less than a bus, as well as substantially reduce the need for parking lots.

“I mean, it’s going to be I think really cheaper to (travel) point to point with a robotaxi, which is an autonomous Tesla – (and) every car we’ve made in the past three or four years will be capable of that – than a bus or a subway it will cost less than the subsidized value of bus ticket,” he said.

Musk did note the potential for “insane traffic” as a result and pointed to the Boring Company as one solution.

“So back to this little tiny baby company, the Boring Company which I initially started as a joke, and now I think it actually could be quite essential to alleviating the insane traffic that will happen when cars are autonomous because you reduce the pain of travel and reduce the cost of travel so dramatically.”