Ridesharing

The odds of Tesla successfully capitalizing on autonomy increased with the news that Trump's transition team is planning to make regulating self-driving vehicles a top priority. Tesla holds a unique position, as it can pursue autonomy through a combination of two business models: asset-light, focusing on vehicle hardware sales, or asset-heavy. I believe these strategies could significantly boost Tesla's operating profit by the end of the decade, with a wide range of potential outcomes—anywhere from a 10% to a 155% increase, depending on which model they pursue. My prediction: by 2030, autonomy will account for 40% of Tesla's operating income.

Today, Waymo alone is too small for Alphabet investors to care about. However, the management team is sharing more about their rapid progress, plans to expand operations, and has raised additional outside capital. I've modeled the business and found it to be surprisingly attractive. I believe Alphabet will spin out Waymo in the next 2-4 years, with a potential valuation of $350B to $850B by 2030, which could add between 12-28% to GOOG's current market cap, depending on Alphabet's ownership percentage.

On the surface, the waiting game will continue for TSLA investors as the Cybercab and Optimus are still years away. Beneath the surface, the "We, Robot" event posed a challenge for traditional automakers as Tesla showcased an innovation edge that puts an end to the "Is Tesla a tech or car company?" debate.

I’ve had a week to process the “We, Robot” event, including conversations with several industry players and am left with 4 takeaways. 1) The world needs autonomy. 2) It’s going to take longer than I thought to get there. 3) Once the Robotaxi fleet is nationwide, it could add +20% to Tesla’s operating income. 4) Tesla's biggest opportunity lies in unsupervised FSD driving more consumer sales.

Tesla's "We, Robot" event is Thursday, October 10 at 10p ET. The two key topics orbiting the event include the number of vehicles they'll announce and timing of production. I'm looking for 3 vehicles (most are expecting two) and I believe we'll only hear production timing on the Model 2, which I expect to begin late in 2025. This timing is a few months later than what Elon's comments suggested on the June earnings call. The one wild card could be the more affordable Model 2 is actually a stripped down Model 3, which would be viewed as a negative by investors.

This note provides Deepwater’s updated timeline of EV adoption in the United States. Previously, we had estimated that by 2030 50% of new car sales in the US would be fully electric. We now believe by 2030 only 25% of new car sales will be EVs. We expect the industry to cross the 50% threshold between 2035 and 2036. As for Tesla, we're expecting total 2030 deliveries of 4.5m, compared to the Street at 3.6m (FactSet).

While it's still more than two months away, I'm sharing my early predictions for the "Robotaxi Event". I expect three vehicles to be revealed, including Robotaxi, Model 2 and Cybervan (tailored to the ride-hailing vision). I expect initial production ramps could start as soon as summer of 2025, with FSD approval playing a large factor in the timing. These vehicles fit into Elon's vision that they need to solve autonomy to unlock shareholder value.

As investors, we review thousands of company decks every year. Often times, we underweight the total addressable market (TAM) slide, given every company seems to advertise a massive TAM. We’ve lost some faith in said company’s ability to reasonably estimate…

In their first quarter as a public company, Uber reported earnings slightly ahead of expectations, with a $1.01B net loss on $3.10B in revenue. Our takeaways: 2019 will likely be an unpredictable year for Uber shares, given the company remains…

Lyft reported first-quarter 2019 earnings in their first-ever report as a public company with overall positive results. Our takeaways: Steady growth of user metrics Lyft’s active riders grew 46% y/y to 20.5M, average revenue per rider grew 34% to $38,…

As we consider the future of transportation and the role that ridesharing will play, we want to better understand how consumers of these services use and think about them. To that end, we recently surveyed 450 US consumers about their…

On Friday, Lyft became the first ridesharing company to go public. By beating Uber to go public, Lyft will, to some extent, control the narrative around the US ridesharing market. That narrative will be centered around big ideas like ending…