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Elon Musk says difference between Tesla ‘worth a lot of money or worth practically zero’ comes down to solving self-driving tech

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Elon Musk’s vision for fully self-driving cars involves them being able to find their drivers and pick them up.Maja Hitij/Getty Images

  • Elon Musk says Tesla’s true value comes down to solving the question of self-driving.

  • Without the groundbreaking technology, the automaker “would be worth practically zero,” Musk said.

  • It has promised self-driving cars since 2015, but Tesla has since faced setbacks with its software.

Tesla founder Elon Musk said the key to his electric carmaker’s value was whether it could achieve self-driving technology, adding the company would be “virtually worth zero” without it.

The billionaire was talking about several software issues for Tesla vehicles that he wanted to fix, such as the in-car web browser, which he says is currently too slow.

“But the focus is on solving full self-driving,” Musk said in an interview with the “Tesla Owners Silicon Valley” YouTube channel, posted Tuesday.

“It’s key. It’s really the difference between Tesla being worth a lot of money or being worth practically zero,” he said.

Musk said creating fully autonomous vehicles is critical to Tesla’s financial success and cited a meeting with an unnamed auto investor to explain his belief.

“He said automakers don’t make money from new car sales. They make all their money selling used parts to their existing fleet,” Musk said.

“The lifespan of a car, before it gets to the scrapyard, can be 20 years. The warranty usually expires after four years and there are a lot of things that are not covered by the warranty. “, did he declare.

“If you have a stable fleet, that means 80% of your fleet is out of warranty,” he continued. “So you can sell high-margin spare parts for the existing fleet and you can sell your new cars with effectively zero margin. It’s like a razor and blades thing.”

Musk said this presented a “massive barrier to entry” for new automakers like Tesla, which have to charge far more for their cars than their competitors.

To do that, they have to make a product “so compelling” that buyers are willing to pay more, he said. According to Musk, the compelling features of the Tesla are the electric power and self-driving potential of its cars.

“It’s the only way to get there. You have to win on autonomy and you have to win on electrification,” he said.

Musk’s self-driving promise still hasn’t been fulfilled

But Musk has been making broken promises to develop self-driving Teslas since 2015, when he predicted the technology would hit the roads in three years.

Tesla already has an “Autopilot” feature that allows its cars to automatically adjust their speed and steer into their lanes, though the feature still requires driver supervision.

Its “Full Self-Driving” service, which Tesla owners can purchase for a one-time $12,000 fee or a $199 monthly subscription, allows the car to automatically change lanes, recognize stop signs and traffic lights and to park. But as with the autopilot feature, the driver’s full attention is still needed in the car.

In 2019, Musk said he was “certain” that by the end of this year, Teslas “will be able to find you in a parking lot, pick you up, take you to your destination without intervention” .

“It’s not a question mark,” he said at the time.

But with Tesla facing setbacks over its self-driving software prototype, it’s unclear when the technology will officially launch. During a fourth quarter 2021 earnings call held in January, Musk again promised that Teslas would become fully autonomous by the end of the year.

Tesla shares were worth $699 on Wednesday, down 41% year-to-date from their January high of $1,200. Tesla’s market capitalization is estimated at $724 billion.

Read the original article on Business Insider

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