Tesla's Robotaxi Service

According to ARK Invest, Tesla (NASDAQ:TSLA)'s upcoming robotaxi service represents a transformative, multi-trillion-dollar opportunity in the mobility industry.

Following Tesla's third-quarter earnings report, the company confirmed plans to launch a ride-hailing service next year in Texas and California, unlocking a market larger than the traditional ride-hailing sector.

"Elon Musk confirmed that next year Tesla will launch a ride-hail service—in our view, unlocking a multi-trillion-dollar robotaxi opportunity—in Texas and California," said ARK.

ARK believes Tesla can leverage electric vehicle cost advantages over gas-powered cars. They explain that the operating costs associated with electric vehicles are roughly one-third those of gas-powered counterparts.

Tesla estimates that, at scale, robotaxi rides could cost consumers only $0.30-0.40 per mile, significantly lower than the $2 per mile typical of ride-hailing services and the $0.70 per mile cost of personal car ownership.

Tesla employees have already been testing the service in California. While some states will require a safety driver during initial phases, ARK believes Tesla's large fleet will help meet regulatory thresholds swiftly.

Even with potential regulatory delays, ARK sees strategic benefits in starting with a human-driven service. The opportunity extends beyond operational savings, with lower price points potentially unlocking around $11 trillion in revenue, about 80 times larger than the addressable market for Uber (NYSE:UBER) and Lyft (NASDAQ:LYFT) today.

ARK emphasizes that Tesla's "multi-trillion-dollar opportunity" depends on quickly scaling and deploying vehicles without safety drivers for optimal efficiency.