One problem in your analogy, for McDonalds, the franchisee is the one who actually operates the business.
For the Cybercab, Tesla is the one operating it via "Full Self Driving", their app, and the Tesla rideshare network. As the owner, the only thing you do is own it, insure it, have a place to park it, and take on the risk of what happens if the vehicle registered to you is in an accident. Clearly, a pretty one-sided assignment of risk.
Actually, while I still like your point there really is still a lot of operational work.
You need to clean, inspect, repair, insure, secure and charge the cars. To do so efficiently you will need to custom develop premises full of chargers and efficient charging and cleaning infrastructure.
That absolutely is operationally intense. Premises, permits, construction and then significant operations.
Maybe? It's how McDonald's runs things too. They make the food centrally and ship it to franchises. They take on brand risk, food logistics at scale and so on. Franchisees deal with local demand, operations, hiring, local laws and so on.
It's not an exact 1:1, but that seems to be the model here. Tesla does the things that can scale (FSD, manufacturing, etc.) and operators do the things that can't.
I think a more apt analogy is iPhone. You pay Apple for a brand new one, they make more money when you make in-app purchases.
Another really important issue is depreciation. You own the car for a few year and eat a cost of depreciation, and then figure out how to dig yourself out of the hole the way Hertz did. Similar to iPhone- you use one for 2+ years and then get a new version- you're also responsible if the phone breaks.
They could, but running local operations isn't his forte, preference or interest, it seems. Even if he had a massive fleet of these, he'd have to navigate local laws, demand, operations and logistics.
His revealed preference is to run things centrally and at massive scales.
They could, but running local operations isn't his forte, preference or interest, it seems. Even if he had a massive fleet of these, he'd have to navigate local laws, demand, operations and logistics.
Comments
One problem in your analogy, for McDonalds, the franchisee is the one who actually operates the business.
For the Cybercab, Tesla is the one operating it via "Full Self Driving", their app, and the Tesla rideshare network. As the owner, the only thing you do is own it, insure it, have a place to park it, and take on the risk of what happens if the vehicle registered to you is in an accident. Clearly, a pretty one-sided assignment of risk.
Actually, while I still like your point there really is still a lot of operational work.
You need to clean, inspect, repair, insure, secure and charge the cars. To do so efficiently you will need to custom develop premises full of chargers and efficient charging and cleaning infrastructure.
That absolutely is operationally intense. Premises, permits, construction and then significant operations.
That seems like even more downside risk, expenses, and maintenance that don't generate any revenue for you the vehicle owner.
Maybe? It's how McDonald's runs things too. They make the food centrally and ship it to franchises. They take on brand risk, food logistics at scale and so on. Franchisees deal with local demand, operations, hiring, local laws and so on.
It's not an exact 1:1, but that seems to be the model here. Tesla does the things that can scale (FSD, manufacturing, etc.) and operators do the things that can't.
I think a more apt analogy is iPhone. You pay Apple for a brand new one, they make more money when you make in-app purchases.
Another really important issue is depreciation. You own the car for a few year and eat a cost of depreciation, and then figure out how to dig yourself out of the hole the way Hertz did. Similar to iPhone- you use one for 2+ years and then get a new version- you're also responsible if the phone breaks.
That's actually a very good point.
Also if Elon Musk has a demonstrable superpower it's the ability to raise capital. So they really could order 100,000 of these themselves.
They could, but running local operations isn't his forte, preference or interest, it seems. Even if he had a massive fleet of these, he'd have to navigate local laws, demand, operations and logistics.
His revealed preference is to run things centrally and at massive scales.
Doesn't Tesla operate its own dealer network?