⚡ TSLA | ARK Invest on Tesla’s $11 Trillion Opportunity

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the world is changing thanks to advanced
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technologies new innovations are being
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delivered faster than ever before but
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there's one change that could be here
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sooner than you think maybe even sooner
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than i think i'm talking about
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autonomous vehicles which could be one
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of the most meaningful innovations of
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all time imagine giving every person who
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commutes an hour back each and every day
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so why is tesla one of the only
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companies really tackling this challenge
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in this episode i'll highlight some of
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the latest research on the autonomous
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vehicle market if you're interested in
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tesla's progress specifically head to
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the time stamp on your screen right now
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there i'll show you how tesla is
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attacking this challenge from every
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angle and one key technology that could
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separate the winners from the losers
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your time is valuable so let's get right
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into it starting with the latest market
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research as presented by arc invest
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analyst tasha kini during their 2022 big
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ideas summit we think that autonomous
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cars could be very inexpensive to
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consumers autonomous taxis autonomous
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ride health systems could dominate urban
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transport and ultimately we think this
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could be one of those most meaningful
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economic productivity delivering
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innovations of all time we think that
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the gdp contribution from autonomous
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ride hail systems could total around 26
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trillion
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by 2030 at its floor we expect the price
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per mile that you could profitably
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charge a consumer could be about 25
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cents per mile well the price of
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point-to-point mobility really hasn't
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changed since the model t rolled off the
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first assembly line thanks to higher
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utilization rates that cost could be as
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low as 25 cents per mile
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of course there'll be a lot of benefits
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to autonomous cars we think they'll be a
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lot safer they'll be extremely
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convenient um but what do we think will
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drive demand that is this price
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autonomous ride hill should attract you
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know not only people that are in the
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ride-hailing market today participants
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in the market today but also car owners
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consumers value their time at about 60
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cents to a dollar ten per mile on
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average you know the high end of that is
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uh time spent on commuting work related
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travel the low end of that is time spent
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on say errands or you know personal
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travel but today consumers pay about two
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dollars per mile on average for ride
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hail in western markets that's about the
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average price of an uber today so
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they're already paying up for this
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additional convenience of ride hail
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notably this is also much higher than
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the marginal cost to drive you know the
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cost of gas insurance all the costs that
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you pay you know in a day-to-day or on
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an annual basis as opposed to to the
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fixed costs which are also included in
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our um 70 cents per mile estimate so the
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marginal cost is about 34 cents per mile
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and importantly if you go back to that
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25 cents per mile estimate that we have
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that's going to be lower than even the
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just the marginal cost to drive that 34
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cents so you can imagine that there's
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going to be a swath of demand worth at
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around you know 134 billion dollars
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that's using price points from what we
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see in today's ride hailing options that
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two to four dollars per mile and this is
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mainly in western markets then at about
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990 billion dollars of opportunity that
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will be for western markets supplanting
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commuting miles this is at the higher
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end of that value of time analysis that
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we did and then another 2.4 trillion
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dollars of opportunity for non-commuting
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miles so this is again western markets
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the value that people place on their
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personal driving miles well moving away
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from western markets um two places like
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china where ride hill is already
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extremely cheap that's another 2.75
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trillion dollars worth of opportunity um
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so that's coming in at around 50 cents
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per mile a little bit lower and then
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finally this super long tail that you
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see here in the graph an additional five
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trillion dollars of opportunity at that
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low low cost of 25 cents per mile for
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autonomous taxis and you know sam
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mentioned in this presentation that
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there could be neighborhood electric
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vehicles you could picture this being a
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purpose-built autonomous taxi this is a
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segment of the market where you bring
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many more people in that aren't
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participating in ride hill today because
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they're all of a sudden getting access
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to really cheap point-to-point travel so
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all in all this sums up to about an 11
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trillion dollar addressable market you
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can see here in the graph that in the
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next 10 years you know traffic could
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more than double this is because of
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course we expect autonomous ride healing
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to be cheap and convenient people might
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take it more often but again more
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importantly it could expand the customer
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base and this could add to miles
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traveled you know we're seeing the early
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innings of air taxis so these are
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autonomous electric machines that fly
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they can transport individuals or a
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couple people at once and when air taxis
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commercialize they could cost roughly
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the price of what a taxi would cost you
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from manhattan to jfk today so an
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airport cab but you'll get to the
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airport in about 18 minutes and the
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trade-off at the time you can imagine
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will be either you take an air taxi or
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you take an autonomous taxi the
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autonomous taxi which you can see here
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in green
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is going to be a lot cheaper maybe just
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ten dollars for the whole trip but it's
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going to take you longer again because
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traffic will be worse so that's really
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the trade-off that you'll be making um
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between the two and then finally i'll
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point out here on the graph you see
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subways we think that mass transit will
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likely still stay as one of the cheapest
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options out there and when we look at
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the enterprise value that we expect off
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of these systems we think the lion's
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share of the economics should accrue to
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the autonomous platform providers these
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are the companies that actually own the
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technology stack the company's building
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the technology that makes the car drive
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itself so that alone by 2026 we think
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could be an 11.7 trillion dollar bucket
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of public enterprise value ascribed to
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these systems if you think about the
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ride health space today and the
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automakers and car rental everyone in
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the car ecosystem today we don't
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necessarily think that those players
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will be the ones to be around in the
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future so as of november last year the
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enterprise value of all automakers was
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about four trillion dollars remember
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that that's mostly gas powered car
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manufacturers right evs are in the
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single digit uh percentage points of all
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cars produced every year not every
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automaker will survive the transition to
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electric technology let alone autonomous
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technology um but those that do could
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enjoy a 1.6 trillion dollar opportunity
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in the autonomous electric future lastly
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fleet owners that's about 300 billion
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dollars worth of enterprise value by
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2026. these are companies that could be
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you know car rental companies that want
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to survive this transition companies
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that house and maintain the vehicles
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they serve as an important part of the
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ecosystem all in all we expect that
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autonomous ride hail could add about 26
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trillion dollars to global gdp by 2030.
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so on the losses side almost 2 trillion
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dollars of personal car sales you may
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stop using your personal car and then
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eventually the next the next time you
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come up to purchase one you won't and
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these will be gas-powered cars mainly
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right that will no longer be purchased
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there's about 660 billion dollars worth
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of fuel revenue um that could go away
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you know electric vehicles require much
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less maintenance than a gas-powered car
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we expect all autonomous vehicles to be
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electric lastly on the losses side
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medical revenue property repair revenue
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these are buckets that we're assigning
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to the revenues that are spent on car
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accidents and then actually one more
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bucket is insurance we expect autonomous
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cars will be 80 percent less likely to
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get in an accident than human driven
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cars today so insurance will likely be
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cheaper on these vehicles moving to
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gains the total gains are about 30
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trillion this includes uh 16 trillion
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productivity uplift 10 trillion dollars
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in service revenue this is the uh the
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revenues that we expect off of the taxi
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platforms themselves an economic gain
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for the for the preservation of life and
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then about a trillion dollars of
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incremental autonomous car sales if you
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look at the graph on the right we think
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that the impact from robo taxis could be
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two to three percentage points on annual
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gdp by 2030. so there are a couple big
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takeaways from tasha kini's research
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that i want to highlight the first
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insight is how much of the total
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addressable market for autonomous ride
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healing is unlocked as you lower the
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cost per mile here's an easy way to
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think about it if an iphone costs three
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thousand dollars almost no one in the
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world would be able to buy one if that
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same iphone cost three hundred dollars
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instead almost everyone could buy one so
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the total addressable market is way way
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bigger even though we dropped the price
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of the iphone by 10x the amount of
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people who could get one went up by 10
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000 x that relationship between lower
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cost and higher demand is almost never a
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straight line and it turns out that
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today's market for autonomous ride
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hailing is tiny if you replace all the
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ubers and lifts and taxis on the road
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today and charge between two and four
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dollars per mile you unlock a little
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over one percent of the total
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addressable market in terms of miles
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driven just one percent if you can knock
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the price per mile down from two dollars
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to one dollar though you unlock another
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eight percent of the total addressable
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market so we cut the price in half but
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we just seven x the amount of people who
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could afford to use the service if you
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cut the price in half again to around 55
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cents per mile you unlock another 45 of
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the market making that market five times
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bigger again and if you cut the price in
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half again you unlock the rest of the
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global market including all the people
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who couldn't afford any other kinds of
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travel before but can now afford to take
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an autonomous robo taxi here's an
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interesting slide from tesla's autonomy
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day back in 2019 tesla says their robo
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taxi price per mile will be under 18
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cents and they'll take a gross profit of
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65 cents so let's call it 85 cents per
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mile total just as an example i know a
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lot of numbers could change between now
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and then but 85 cents per mile would put
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them right between the one dollar and
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ten cent and sixty cent brackets meaning
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tesla could realistically serve
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something like the 25 percent wealthiest
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market for autonomous ride hailing
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that's a decent slice of the pie but the
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flip side here is there's a huge
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incentive to build a cheaper reliable
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and more scalable solution to this
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global problem whether it's a twenty
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thousand dollar car or some sort of even
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smaller solution every penny that tesla
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can knock off of their price per mile
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unlocks way more potential customers to
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do that tesla needs to keep making
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improvements to their software hardware
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and their manufacturing capabilities all
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while keeping their promise of being
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sustainably driven all those different
10:54
technologies are why i make so much
10:55
tesla content there's just so much to
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talk about in fact there are a lot of
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really smart investors covering tesla's
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technologies from a lot of different
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angles that's why one place i've been
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12:02
as well going back to arkhanvest's big
12:05
ideas the other insight here is the
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companies that own the autonomous
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technology stack will dominate
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enterprise values not the fleet owners
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or even the automakers so 88
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of the enterprise value will be captured
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by platform providers that don't exist
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yet and are not guaranteed to be the
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same companies making the cars or
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providing the service to the end user
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for the most part this is an artificial
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intelligence problem that will get
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solved with mountains of data so some of
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the companies competing in this market
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may not build a single car at all that's
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why companies like gm and uber may not
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really stand a chance tesla is
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vertically integrating all three of
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these businesses at once an autonomous
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platform provider an autonomous electric
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vehicle manufacturer and a fleet owner
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depending on the final business model of
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their ride healing network at scale so
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let's talk about how tesla has unlocked
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some of that scale already tesla's
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current vehicle fleet gives it access to
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between 30 and 40 million miles of data
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every single day which is up from 20
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million miles of data per day last year
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all that data is helping their ai
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perform better in incredibly difficult
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situations like getting cut off in very
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tight spaces or pedestrians walking
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through the car's lane and awkward
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angles the ai is able to plan smooth
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maneuvers with high confidence so that
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the vehicle doesn't end up doing things
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like starting a lane change that it
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won't finish braking more often than
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necessary or driving too aggressively
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tesla's neural networks have already
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solved the many complex challenges that
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were previously considered impossible
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which has dramatically increased the
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probability that their robo taxis will
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make it to the market here's another big
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reason that tesla is positioned to win
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the race for autonomy at scale they've
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moved their full self-driving system to
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vision only no more relying on radars
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and no lidar remember expensive parts
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and more maintenance means higher costs
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per mile doing this task with cameras
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only is a massive deal because you want
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to track stuff in the present and
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predict its motion in the future and to
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do that you need to have a very good
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estimate of range you need to know how
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far away something is to understand how
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fast it's actually moving and if it's
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getting closer or further away over time
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this is a really hard challenge to do
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from single images in real time but
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tesla has proven that they're great at
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pulling that information from video my
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background is in computer vision and
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radar signal processing and i can tell
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you this is an incredibly hard problem
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to solve it's one thing to be able to do
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this when the tesla is stopped on a flat
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road and when it's sunny out it's
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another thing entirely to do this in bad
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conditions like snow fog and rain well
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during their most recent ai day tesla
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showed how they asked the fleet for
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every clip where things fall off a
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vehicle and disrupt the vision of the
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cameras and in one week the fleet
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returned 10 000 clips of this happening
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only tesla has access to so much data of
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such a specific thing happening because
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it's their cars and their cameras and
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their software returning that data for
14:52
processing this is something that
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tesla's artificial intelligence could
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solve at scale only because they have
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such a massive advantage thanks to their
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existing fleet on the road today i also
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want to point out one other reason that
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vision only makes a lot of sense that no
15:06
one was really considering before
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tesla's most recent ai day since tesla
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dropped radars they no longer need to
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simulate radar data when they want to
15:14
train their ai since the whole system is
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now vision only tesla can run vision
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only simulations of road conditions
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using photorealistic physics engines and
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not worry about what the radars would
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see in each case they're basically able
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to give their ai more practice by
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letting it play a very realistic video
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game when there aren't enough real world
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examples for that ai to work with the
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way tesla has solved this problem is the
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actual reason it could be game over for
15:38
other automakers who would need to
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simulate what everything would look like
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not only to their own cameras but also
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to their specific sensors like radars
15:46
and lidars it's hard to find another
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company so far ahead of its competition
15:50
in terms of unlocking and serving a
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brand new market like autonomous ride
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hailing i live near tampa florida and i
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would definitely give up my car if i
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could get around town for cheap enough
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and be able to catch up on things like
16:02
shows or social media instead of having
16:04
to drive comment below with your
16:06
thoughts on autonomous ride hailing
16:07
would you ride in a self-driving car
16:09
today would you stop owning or releasing
16:11
your own vehicle in favor of ride
16:13
hailing if it was cheap enough how cheap
16:15
would it have to be i'm excited to hear
16:17
your thoughts in a future episode i'll
16:19
spend some time talking about tesla's
16:21
real competition in this area not other
16:23
automakers but other big data and
16:25
artificial intelligence companies if
16:27
you're interested in seeing that
16:28
research feel free to like this video
16:30
and subscribe to the channel with all
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notifications turned on that's a great
16:34
way to invest in the channel that
16:36
invests in you besides artificial
16:37
intelligence tesla also has a massive
16:39
lead in robotics and energy storage a
16:42
lead that could end up destroying
16:43
companies like ford and gm if you want
16:45
to know exactly how i think that'll play
16:47
out check out this video right here or
16:50
if you want to learn more about the
16:51
future of artificial intelligence and
16:53
some other great stocks in that industry
16:55
this episode right here is for you
16:57
either way stay long stay strong and
16:59
thanks for watching until next time this
17:02
is ticker symbol you my name is alex
17:04
reminding you that the best investment
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you can make is in you