The Future of Autonomous Driving: Uber and DiDi Soar, Tesla Plummets

A event known as the world-changing werobot conference eventually faded from view after Tesla's nearly 9% plunge, but upon closer inspection, Uber's stock price has reached a new high. In addition, Didi's stock in the OTC market is also hovering at historic highs. Tesla's conference has provided a wedding dress for other practitioners. Behind this is a new change in everyone's attitude towards autonomous driving, Tesla's development and prospects. The future direction of Tesla, as well as the current status of industry giants like Uber and Didi in the taxi industry, are both worth deep consideration at the moment.

I. Doubts about the Strategic Focus In this conference, Tesla launched multiple new products, with actual vehicles, at least not just using AI-generated videos for demonstration, which can be considered a more sincere update from Tesla. However, upon closer inspection, many flaws can be found. For example, the latest cybercab, which is the main model for building a robotaxi network in the future, appears to be a combination of the Cybertruck and Model Y in terms of appearance. It is the focus of this conference. The design is very radical, with no steering wheel, rearview mirror, or pedals, showing absolute confidence in FSD, requiring no intervention at all. However, Musk stated that it is expected to achieve a cost control below $30,000. The Cybercab only has two seats, which is insufficient for a taxi's passenger capacity. It should be a low-priced product, and cost-saving measures have already reached the point of eliminating pedals and steering wheels. Theoretically, with the omission of screens, consoles, etc., a product like this should have manufacturing costs well below $20,000. If Chinese car manufacturers good at cost control like BYD produce a 2-seater model without a steering wheel and pedals, it should be possible to achieve costs below $10,000. Therefore, once the $30,000 figure is mentioned, everyone doubts Tesla's cost control capabilities, which is also the least recognized aspect in the market. However, it is also possible that Musk's intention is that the price of this car, not the cost, does not exceed $30,000. The actual cost may be as we estimated, $10,000, with each car generating at least $20,000 in average profit. If so, Tesla's future is bright. However, this raises a new question: if Tesla is capable of selling a $10,000 cost car for $30,000, why are the average profits of the main models 3 and Y only a few thousand dollars? Why do they need to promote sales through price cuts and subsidies in North America this year? Regardless of the explanation, it reveals flaws, indicating that the products of this conference are not serious and are highly likely to be revamped significantly before being implemented As for Robovan, a more futuristic product, no loading lights were found on site, and its design clearly ignores the ground clearance issue, making it unable to pass on slight slopes. It is also unclear whether it needs a track, so it can basically be considered a concept product in a PowerPoint presentation. There have been no surprises in the development and usage data of FSD. Since it was exposed in May that the user subscription rate for the new version of FSD was only 2%, Tesla has not responded, and the financial report has not disclosed this data, casting doubt on the true level of FSD. The most anticipated low-cost new car models to boost performance are absent. Moreover, the landing of robotcabs will take place two years later, which means that there is a great opportunity for any peers and competitors in the field of autonomous driving and unmanned taxis to catch up or expand their lead. Uber's valuation was previously suppressed largely due to the fear that Tesla's FSD disruptive innovation would completely destroy the existing taxi model. Therefore, with this suppression factor eliminated, it has gained an unexpectedly large increase. For Tesla, a strategic transformation is clearly visible at present, transitioning from a car company to a company that provides autonomous driving models and vehicles, and in the future, can also profit from operating a network of unmanned taxi services. However, there is a clear issue in its concept. Tesla describes a very bright future for autonomous driving, greatly promoting efficiency, reducing waste, enabling every vehicle to run 24 hours a day without the need for labor cost control, and optimizing the number of vehicles to meet human society's transportation needs. But from a business perspective, for a taxi company like Uber, the higher the efficiency, the more unmanned the fleet, the better the automation. But as a car company? A family usually only needs one car for travel together, but due to different members' different travel needs at different locations and times, they may need two or more cars. After FSD achieves Level 5 autonomous driving, within a family, one car can be better utilized, such as dropping off the husband before taking the wife to work, which will greatly save resources. But for car sellers, do they hope that every family owns one car or two? Of course, they would love for every family to own 10 cars, everyone to be a car collector, waste and surplus are the sources of profit for companies. Tesla's vision is very promising, but its current identity is the world's second-largest new energy vehicle company, not a taxi platform. Regarding the issue of current Tesla car owners transitioning to a robotaxi fleet, firstly, whether Tesla's car owners, positioned in the mid-to-high-end market, are willing to let dozens of people repeatedly get into their cars unsupervised in a day, and how to ensure the safety of items in the car. The insurance issue is the most practical one. Operating vehicles for rental purposes, running outside every day, will lead to a surge in failure rates and accident rates. Therefore, the annual premium is more than twice that of a normally used vehicle. Before making money through sharing, one must first calculate whether the extra money paid for insurance can be recovered. And the times when taxis are most needed are often the times when cars are most needed, such as during rush hours, heavy rain, or snowstorms. Most car owners arrive at their workplace when they don't need a car, which is when no one needs a car. Sharing the car at this time may not attract many orders. Overall, the vision of transforming the existing Tesla into a large-scale ride-hailing fleet is unrealistic and, most importantly, harms Tesla's brand position, causing more harm than good Tesla clearly knows that new models and new teams are key, and cannot rely on old car owners, as Robotcab also pointed out. It is obvious that Tesla is targeting the shared car market rather than the car manufacturing market. However, currently, the profits of traditional car giants are more abundant, with Toyota making $30 billion a year, and Uber's ride-hailing business making around $5 billion a year. Should they focus on the back instead of the front? In the first half of this year, Tesla was suppressed in the North American car market by Japanese hybrid cars, with Toyota taking away the increment and profit of new energy vehicles. With this reality and shift, if Tesla is scared, it will face serious problems. Where Tesla's strategic focus goes next will determine its future. If it remains a car company, Tesla's emphasis on significantly optimizing efficiency with FSD, reducing the number of cars needed, rather than hoping consumers will repeatedly purchase and waste, is not a good business path. Selling cars and automation solutions to fleets or platforms like Uber? Feasible, but Tesla and Uber are not on good terms. Uber does not seem to recognize Tesla's design and cost control capabilities, nor its route. Finally, self-operated autonomous vehicle fleets for maximum profit, but with enormous financial pressure, bearing all risks themselves, relying on the extremely slow capital recovery from daily car rentals. Traditional car companies transfer financial pressure to car owners once cars are sold, which could make Tesla the most asset-heavy company in history. Therefore, Tesla's current state is filled with various uncertainties, which is why the market reaction has been so intense.

Second, Uber's Continued Growth Looking at Uber's new high, as well as DiDi's OTC stock price at historical highs, it can be seen as a valuation boost for traditional ride-hailing companies. In reality, over the past year, ride-hailing companies have been experiencing accelerated growth. Uber's revenue grew by 16%, while EBITDA grew by nearly 70%. They also maintain such optimistic estimates for the next 3 years, clearly benefiting from the realization of economies of scale. Ride-hailing and food delivery businesses become more efficient and user-friendly with more capacity So as income increases, profit margins will also increase significantly. Uber's current growth is impressive, partly due to its substitution for traditional taxis. In Europe and America, there are still many regional taxi fleets occupying a large market share, but Uber's economies of scale have led to irreversible cost advantages, continuously devouring their market share. On the other hand, car prices in the United States have risen in recent years, prompting many people to choose ride-hailing services for their daily commuting needs. It should be noted that another 25% of Uber's profits come from its food delivery business, with the current profits and market value of Uber, the ride-hailing segment probably accounts for about 75% of the total. Interestingly, Uber's ride-hailing and food delivery services have formed a synergistic effect, mutually promoting economies of scale, similar to the situation with Meituan. Previously, Uber has already put forward growth expectations for the future, and its financial reports have consistently exceeded expectations, but its valuation has always been suppressed. The market's lack of sensitivity to financial reports is largely due to Uber's rivalry with Tesla. Uber's development of autonomous driving technology has basically targeted Tesla's various competitors, both in hardware and software, such as Google's Waymo and BYD. Tesla's dominant position in the U.S. stock market gives it too much influence. Once Tesla succeeds, Uber's dual-mode business will have to start over. Obviously, this financial report has eased concerns about Uber's certainty, as Tesla's indecisiveness has made everyone less worried about Uber. At least 26 years later, after Tesla's Robotcab is operational, relying on the current version of FSD, it is unrealistic for existing Tesla vehicles and owners to enter the market. Currently, Uber's PE ratio seems high, but it is also a financial statement illusion (similar to Meituan). The actual quarterly free cash flow has reached $1.7 billion, and the actual market cap/free cash flow ratio is not high, at only about 25 times. If the above EBITDA annualized growth rate can reach 30%+, Uber can be considered a relatively reasonably valued company. So, this is a good opportunity for a significant rise. From this, we can also see that the instant transportation and logistics industry model has been established, with leading players effortlessly making profits. In China, there are Meituan and DiDi, while overseas there are Uber and DoorDash. Currently, Uber's ride-hailing business generates profits of around $5 billion annually, ranking it among the top 10 automotive companies globally. According to Uber's growth expectations, it will have the ability to generate around $10 billion in profits in the future. This model is indeed attractive and promising, unlike the automotive industry, which is asset-heavy, research and development-intensive, with thin profit margins, and with the development of shared transportation reducing people's need to own cars Elon Musk has a pretty long-term vision, but lacks execution. He proposed the concept of robotaxi, but in the end, Uber and others took all the landing and profits, making him a wedding dress for others, which is also a possible scenario. Conclusion Currently, it seems that Tesla has opened up investment space for Uber, and Uber's moat and business model prospects should gradually be revealed after this new high. Autonomous driving is certainly a revolutionary model, and achieving fully autonomous driving is inevitable, it's just a matter of time. However, behind the model, who reaps the benefits is the key. The field of large language models has already shown that it is impossible for a single model to dominate performance, leading is also temporary, and software is difficult to differentiate. Gemini, GPT, Llama, no one is giving way to anyone. Basically, most of the benefits go to hardware companies.

FSD seems to be far ahead, but once successful, it is also very easy to be reverse-engineered. The market has always believed that the only beneficiary and representative stock of autonomous driving is Tesla, which is actually similar to thinking that OpenAI/Microsoft is the only beneficiary of large model innovation, which is too one-sided