Tesla’s autonomous future took a step forward today as Trump’s transition team announced plans to prioritize self-driving vehicle regulation within the U.S. Department of Transportation. Currently, the National Highway Traffic Safety Administration (NHTSA), a division of the Department of Transportation, lacks a regulatory framework that mandates pre-market approval for driver-assistance systems like Tesla’s FSD. Instead, NHTSA monitors these technologies through post-market evaluations and investigations. While Tesla and NHTSA have a history of interactions, this development suggests that the path to unsupervised FSD approval may become more streamlined, though not guaranteed.

I believe this fresh approach from the U.S. Department of Transportation will focus on the reality that human drivers are increasingly distracted, fatalities on U.S. roads are rising, and while reports of autonomy failures are heartbreaking, they remain small in number compared to the mistakes humans make. This shift in regulatory perspective is critical for making widely available autonomy a reality. Loosening the regulations around autonomous vehicles could remove a significant hurdle, accelerating the adoption of this transformative technology.

This is essentially the Uber and Lyft model where they own the network and take a 25% cut and the drivers own the vehicles. Most investors prefer this model because it’s less risky since it requires less upfront investment and has higher margins. The only downside is total net dollars will be less given the approach yields significantly less revenue than the asset heavy approach.

My key modeling assumptions are that for Tesla to attract third parties to purchase and manage Tesla fleets, the company must offer attractive economics to both consumers and fleet owners. To win consumers, I estimate that a compelling ride would need to be priced 25% below current Uber and Lyft rates. To appeal to fleet owners, Tesla could offer a lower take rate—around 15% compared to the 25% charged by Uber and Lyft. Regarding market share, my view is evolving, and I now believe Tesla could capture 30% or more of the rideshare market by 2030.

As for the sensitivity to numbers, if Tesla can capture 30% market share (with a 25% discount in ride cost and a 15% take-rate), it would add 10% to operating income. Long-term, if they can take 50%, that would increase operating income by +20%.

A more aggressive scenario assumes the ride price for consumers remains unchanged at $22 for the next six years (rather than declining to $16.50 as in previous estimates), and Tesla achieves the same 25% take rate as Uber and Lyft. In this case, capturing 25% of the U.S. ridesharing market could increase 2030 operating income by approximately 21%, or $6B. Capturing 50% of the market could boost operating income by about 40%, or $12B. I estimate that Tesla’s current business (vehicles, energy, and storage) will generate $29B in operating income by 2030. Therefore, with a 25% share at the higher ride price and take rate, Tesla’s total operating income could reach approximately $35B by 2030.

Sales of Cybercabs:

This impact is small, adding between 1-3% to the overall operating income by 2030. The asset-light approach would require third parties to buy Cybercabs and put them into a fleet. On the Tesla earnings call, Musk reiterated that the company expects to ramp production of the Cybercab sometime in 2026, or in about 1.5 years from now. Additionally, Musk is “aiming for at least 2m units a year of Cybercab. That will be in more than one factory, but I think it’s at least 2m units a year, maybe 4m ultimately”.

Taking Musk’s estimates at face value and growing current Tesla deliveries at an average of 15% per year through 2032, implies that Cybercab (at 3m annual deliveries) would account for a third of total deliveries in 2032.

My sense is that Musk’s math is optimistic. For context, Uber and Lyft currently account for about 4B annual miles driven in the U.S. (with an average ride of 6 miles). Assuming this figure grows at 10% annually through 2032, it would equate to 47B rideshare miles. If each Cybercab can drive approximately 60k miles annually (325 days of operation per year, 15 hours/day, 2 rides/hour, and an average ride of 6 miles), a fleet of about 400,000 Cybercabs would be needed to cover 50% of the U.S. rideshare market. With an average lifespan of 4 years per vehicle, this translates to roughly 100k Cybercab sales per year, generating $3B in annual revenue, and approximately $300m in annual operating income.

While this approach is riskier due to its capital intensity, the rewards could be staggering. This is a similar approach as Waymo is using. In this model, Tesla would own and operate all or part of the fleet. For the sake of simplicity, the sensitivity assumes Tesla owns the entire fleet.

As for the sensitivity to numbers, if Tesla can capture 30% market share (with a 25% discounted to ride cost and a 15% take-rate) it would add 62% to operating income (additional $18B in operating income). Long-term if they can take 50%, that would increase operating income by about 100%.

A more aggressive scenario assumes the price of a ride remains unchanged at $22 for the next six years (compared to a decline to $16.50 in previous estimates). In this case, capturing 25% of the U.S. ridesharing market could boost 2030 operating income by approximately 75%, or about $22B. Capturing 50% of the market could increase operating income by roughly 155%, or $45B. I estimate that Tesla’s current business (vehicles, energy, and storage) will generate $29B in operating income by 2030. Therefore, with a 25% share of the U.S. ridesharing market at favorable pricing and take rates, Tesla could achieve around $51B in operating income by 2030.

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