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Forbes
24-06-2025
- Automotive
- Forbes
Forget Cars—Tesla's Future Is A Robotaxi Empire
BRUSSELS, BELGIUM - JANUARY 10: Tesla Cybercab or Robotaxi two-passenger battery-electric ... More self-driving car on display at the AutoSalon on January 10, 2025 in Brussels, Belgium. (Photo by Sjoerd van) Tesla isn't just making cars anymore—it's rewriting what a car is. The Robotaxi. While legacy automakers focus on electrifying yesterday's models, Tesla is quietly building something far more ambitious: a closed-loop, vertically integrated robotaxi ecosystem. The vehicle is no longer the product; it's the delivery mechanism for an autonomous software platform that generates recurring revenue, mile by mile. If Tesla successfully achieves this, the company will shift from being a car manufacturer to becoming the infrastructure layer of global mobility, relying on the vehicle, the AI brain, the data, and the payments stack. Think AWS, but for transportation. This endeavor isn't about selling more cars. It's about monetizing every idle second of them. Tesla's critics scoff at its valuation, but if robotaxis work, the real question becomes: is it undervalued? Why The Robotaxi Model Is Different Legacy automakers live off one-time transactions. They sell a car and book a margin of around $6,000 on average, and they hope you come back in five to seven years. That's the model. Tesla, with its robotaxi ambition, is rewriting that model entirely: recurring revenue per mile, not margin per sale. Here's the math: A single robotaxi running 70,000 miles a year and charging $0.50 to $1 per mile generates $35,000 to $70,000 in annual revenue. Over a decade, that's $350,000 to $700,000—from one car. The autonomy, enabled by software, operates continuously without the need for multiple buyers or subscriptions. There is no need for a driver, there is no downtime, and there is no intermediary involved. Compare that to Uber or Lyft. They rely on third-party drivers and vehicles — all variable, all costly. Tesla removes the biggest expense in mobility: labor. That's not competition. That's elimination. Vertical Integration: Tesla's Hidden Advantage Most people focus on Tesla's cars. But the real edge lies in something far harder to replicate: vertical integration. While legacy automakers outsource software and tech firms try to bolt autonomy onto third-party hardware, Tesla owns the entire autonomy stack. Tesla keeps everything in-house, from the car itself to its custom Dojo chip, the Full Self-Driving (FSD) software, and the billions of real-world miles that fuel its neural net. That's the flywheel. And it's already spinning. Compare that to Waymo, technically brilliant but with a fraction of the fleet and no manufacturing muscle. Cruise? GM has backed Cruise, but public trust and safety issues have stalled its momentum. Apple? Apple has discreetly withdrawn from the market. Meanwhile, Tesla has 5 million cars on the road, all collecting data, all capable of receiving over-the-air updates, and many already monetized through paid FSD subscriptions. This is not a project awaiting approval. The commercial rollout is already underway, and investors who still view this as speculative may be reconsidering their decision. LOS ANGELES, CALIFORNIA - MARCH 14: A Waymo autonomous self-driving Jaguar taxi is stopped at a ... More light while driving along a street on March 14, 2024 in Los Angeles, California. Beginning today, Waymo One is offering robotaxi services in a 63-square mile area of greater Los Angeles including Santa Monica, Venice and downtown with over 50,000 people on the wait list. Waymo is owned by Alphabet, Google's parent company. (Photo by) The FSD Milestone And What Comes Next Tesla's FSD v12 update didn't just tweak the driving algorithm; it rewrote the stack. Gone is the old rules-based logic. In its place: a neural net trained end-to-end on real-world video, learning like a human and improving like a machine. The shift is exponential, not iterative, and that's the inflection most investors still miss. We saw the first real-world glimpse of this change a day ago, when Tesla launched its robotaxi pilot in Austin. A handful of driverless Model Ys quietly began taking riders, fully autonomous but monitored, at a symbolic $4.20 fare. There was no press release at the time. Just execution. The real catalyst comes next: August 8, 2025, when Elon unveils the Cybercab, a steering-wheel-free, purpose-built autonomous vehicle designed for Tesla's own ride-hailing network. This isn't a concept. The hardware's ready. The software's learning. And the business model is recurring. Tesla isn't just selling EVs anymore. It's renting out the future, one mile at a time. The Financial Reframe: How Analysts May Be Missing It Most analysts still value Tesla as just another carmaker, projecting EBITDA based on unit sales, delivery growth, and gross margin per vehicle. But that lens misses the shift underway. Tesla isn't just selling metal; it's building a vertically integrated platform with software-like economics. Think of recurring revenue from robotaxis, not one-time car sales. Each autonomous vehicle could generate $10,000 to $15,000 per year, per car, at 70–80% margins. When multiplied across millions of units, this moves beyond the traditional Detroit territory. You are now in the realm of cloud software. Add Dojo, Tesla's in-house AI training supercomputer, which serves internal purposes and creates a revenue model akin to a data center. Add the potential licensing of Full Self-Driving software to other OEMs, and what you get is an upside-distance scenario that doesn't fit traditional comps. Tesla 2yr Chart Risk Factors And Realities There is no guarantee of Tesla's success. Even the most bullish investors need to recognize real hurdles. Regulatory approvals will roll out city by city, not all at once—and one high-profile robotaxi crash could dominate headlines and stall momentum. Public trust isn't automatic either; convincing people to ride in driverless cars will take time. And competition is fierce: Waymo has elite tech, Amazon's Zoox is quietly advancing, and China's Baidu is pushing fast in its home market. However, it's crucial to note that none of these companies possess the same scale, brand recognition, or the vast data advantage derived from billions of real-world miles as Tesla. That matters. The path won't be linear, but the opportunity is asymmetric. The market loves to overprice short-term noise and underprice long-term transformation. Investors who can stomach the bumps may end up owning a piece of mobility's future infrastructure—not just a car stock. Why Tesla's Robotaxi Vision Can't Be Ignored Tesla's robotaxi ambition extends beyond simply competing with Uber; it aims to revolutionize mobility, economics, and platform value. If it pulls this off, Tesla won't simply be a carmaker. It becomes a software powerhouse, a data flywheel, and a ride-hailing juggernaut, all vertically integrated. That kind of optionality isn't something traditional auto valuations can capture. You're not buying Ford 2.0; you're buying Apple transportation. Similar to previous significant changes, the market may not immediately recognize this shift. It'll whisper. The company controlling the chip, the car, and the algorithm is poised to transform the game. game. Ignore it at your cost. The author owns Tesla stock.
Forbes
15-06-2025
- Automotive
- Forbes
No, Toyota Didn't Build A Water-Powered Car
BRUSSELS, BELGIUM - JANUARY 13: Toyota Mirai hydrogen fuel cell car at Brussels Expo on January 13, ... More 2023 in Brussels, Belgium. The Mirai is one of the first hydrogen fuel-cell vehicles to be sold commercially. (Photo by Sjoerd van) Over the past two weeks, multiple people have sent me a story about a supposed water-powered car and asked for comment. The story varies, but one widely shared version on Facebook claimed: 'In a move that will shake up the global auto industry, Toyota has just unveiled a water-powered engine powered by hydrogen created through electrolysis — emitting only water vapor! No lithium. No charging stations. Just pure disruption.' This is pure nonsense, but I have been hearing similar stories for decades. I believe the first version I ever heard was that a brilliant inventor had invented a car that ran on water, but the oil companies bought the patent. Or otherwise made the man disappear. These claims are revived every few years, so let's clear this up. Although water can be an energy source, it is not a fuel. Water is actually the combustion product of hydrogen, which is a fuel. Water is produced when hydrogen is burned. Water can function as an energy source in some situations. Falling water can produce electricity via hydropower, and moving ocean water can produce electricity via tidal or wave power. But water as the power source for a vehicle is nonsense. Consider the claim above. A 'water-powered engine', which is immediately contradicted by the phrase 'powered by hydrogen created through electrolysis.' Is the latter phrase technically viable? Yes, but it misses two issues. First, the power source--the fuel--is actually hydrogen. Energy as electricity is being put into the water to split it apart and create the hydrogen (and oxygen). In other words, hydrogen (via electricity) is the power source, but water is a power sink. More importantly, where is the energy coming from to create the electricity for the electrolysis? In this scenario, that would likely have to come from a battery. But such a scenario would be inefficient, because each energy conversion stage involves efficiency losses. That's basic thermodynamics. Rather than use a battery to produce hydrogen via electrolysis, which then has to be converted into energy to power a car, it would be far more efficient (and practical) just to use the initial electricity directly without the conversion steps. There's no question that Toyota has been very active in developing hydrogen vehicles. The confusion seems to stem from a real announcement by Toyota last year. The company filed a patent for a water-cooled hydrogen combustion engine. That's a very different thing than a car that runs on water. In Toyota's design, the engine runs on hydrogen, not water. The claimed innovation lies in the cooling system. Instead of relying on traditional radiators or air cooling, Toyota's system injects water directly into the cylinders. This helps control the high combustion temperatures associated with hydrogen and allows the use of lighter engine materials—ultimately improving efficiency and reducing weight. But the vehicle still requires external hydrogen refueling. It doesn't split water into hydrogen onboard, and it's not powered by water. The term 'water engine' in this case refers to the cooling system, not the fuel source. The recurring claims of a water-powered car make for great clickbait, but they don't align with the laws of physics. Water doesn't 'release' energy as a fuel. It requires some other energy source to convert it into a fuel. That doesn't mean hydrogen-powered vehicles aren't technically viable. They are, and Toyota has been a pioneer in that space. But hydrogen needs to be produced, stored, and delivered, and every step in that process consumes energy. So no, Toyota hasn't built a car that runs on water. They just patented a potentially better way to cool a hydrogen engine. And while that may be good engineering, it's not the miracle of free energy people envision when they read and share 'water-powered car' stories. The real story is more nuanced—and far more grounded in science. It's just not as click worthy.
Forbes
26-04-2025
- Automotive
- Forbes
Europe's EV Sales Accelerate But Long-Term EU Mandates Look Demanding
Fiat Grande Panda battery electric compact car on display at the AutoSalon on January 10, 2025 in ... More Brussels, Belgium. (Photo by Sjoerd van) Europe's new electric vehicle market has been showing signs of life in 2025 with Volkswagen leading the way and the Chinese stumbling temporarily, but the current pace of growth is too slow to get close to European Union long-term targets designed to force citizens entirely out of new combustion-powered vehicles and into EVs by 2035. The EU has decreed that no new vehicles powered by diesel or gasoline engines will be sold from 2035 and the target for 2030 is close to 80%. But the industry is close to forcing big changes in the rules by allowing other technologies to flourish. That would allow a longer life for hybrids and the use of so-called e-fuels. Most forecasters agree that by 2030 European EV sales will reach only between 30 and 50% of the market. Among those brave enough to speculate in print about 2035, investment researcher Jefferies reckons that EVs will reach only 50% of the market. EV Volumes is a hopeful outlier, expecting market share of 60.5% in 2030 and 93.1% in 2035. The European Automobile Manufacturers' Association said new EV sales jumped 23.9% in the first quarter to 413,000, compared with the same period of 2024. European EV sales stagnated last year at just under 2 million and a market share of 16%. The trouble with these carbon dioxide-based EV targets for European manufacturers is that legislators were apparently unaware that China had a huge lead over its own domestic manufacturers and that adherence to the targets would devastate its own industry. This led to the recent introduction of punitive tariffs on Chinese EV imports. There is no shortage of worries for European auto manufacturers. The economy is weakening, and competition from China threatens even the likes of BMW, Mercedes, Porsche and Audi despite the tariffs. Chinese automakers like BYD and Geely now have at least a 30% cost advantage in EV manufacturing, investment bank UBS has said. These premium German automakers are also under threat in China where the locals can now outsell even classic European brands. This upheaval heralds the start of an era where the traditional manufacturers of the West would see their markets undermined to such an extent that some would be forced into bankruptcy or mergers. Professor Stefan Bratzel, director of Germany's Center of Automotive Management, has talked of an approaching 'Darwinian' moment for the industry. President Trump's attempt to abruptly end years of what he calls unfair tariffs couldn't have come at a worse time and has induced frightening stock market and currency fluctuations and threatened to undermine long-established markets and supply chains. These mounting pressures mean EU politicians will be forced to water down the CO2-based rules and allow much more flexibility to give European EV-makers a lifeline. This has already started. The EU recently extended the deadline for 2025 compliance by a couple of years. More serious concessions are likely said Santiago Arieu, analyst with Fitch Solutions. Renault vice-President Gilles Vidal presents a Renault 5 E-TECH electric car. (Photo by EMMANUEL ... More DUNAND/AFP via Getty Images) 'We believe that the notion that Europe's new light-vehicle market will be entirely EVs from 2035 has lost momentum over the past 2-3 years owing to challenges in achieving higher EV penetration rates in the mass autos market. We therefore believe that the prospect of the EU revising its targets closer to 2035 is substantially higher now compared with market expectations in 2021,' Arieu said. Fitch Solutions expects European EV market share will reach around 35% in 2030 and 52% in 2034. Arieu said more affordable and advanced EVs over the medium term allow a moderately optimistic outlook, although much of the increased demand for EVs so far has been induced by government incentives. French automotive consultancy Inovev said most current EV sales are in the price range €35,000 ($40,000) to €50,000 ($57,000), including the Volkswagen ID.3 and Teslas Model 3 and Y. This year will see the launch of many cheaper EVs, like the Citroen e-C3 (from €23,300/$26,500)) Fiat Grande Panda (€24,900) Renault 5 E-Tech (€27,990), Hyundai Inster (€29,250/$33,300)) and Kia EV2. Inovev forecasts an EV market share of 35% by 2030. Next year VW will launch the ID.2 and ID.1. Arieu said European governments are becoming increasingly worried about the damage to employment from the demise of ICE. 'There is growing support from European governments for their automotive sectors as many jobs are tied to ICE supply chains. This suggests that some European countries are likely to show greater resistance in the coming years in relation to the EU's CO2 emission targets and the broader 2035 plan to only allow zero-emission light vehicles to be sold,' Arieu said. Hyundai Inster Cross battery electric car. (Photo by Sjoerd van) 'Despite the recent flexibility introduced by the EU, the emission targets remain stringent, posing significant challenges not only for car manufacturers but also for European policymakers,' Arieu said. This move to ease the way for carmakers is not popular with green advocates like Brussels-based Transport and Environment. T&E said the recent concession was justified by 'unrepresentative' sales data for 2024. 'The EV sales rebound shows that the existing EU target is working. Require carmakers to sell more electric cars and the buyers will come. It is a mistake to change the rules in the middle of the game. This must be the last flexibility carmakers are given. Let's allow the 2030 and 2035 targets to do their work and bring affordable EVs and cleantech investment into Europe,' T&E's Julia Poliscanova said in a statement. Matt Schmidt, founder of Schmidt Automotive Research, sees some good news for Europeans. Schmidt said Volkswagen made a strong start to the year, with four of the top five EV sales in the first couple of months accounted for by its brands. VW made inroads into Tesla's market share as it face-lifted the Model Y. More good news for Europeans concerned Chinese brands, as recent sales acceleration came under pressure. Chinese EV market share rocketed from 3.8% in 2021 to 9.5% last year. 'However, since the turn of 2025, that pace has decelerated and moved into reverse as European brands roll out new products in line with the tightening EU CO2 fleet emission legislation,' Schmidt said in his latest monthly report. That relief for Europeans may be short-lived. 'Things look more positive for Sino-brands such as BYD – which will be helped by local production from the end of this year – SAIC, Geely and Chery entering the market in stealth under various alias brands such as Omoda, Ebro and Jaecoo gaining strength across the U.K. and Spain,' Schmidt said. Schmidt said West European EV sales will jump 32.6% in 2025 to 2.56 million with market share rising to 21.5% from 16.7%. In 2030 EV sales will account for 54.0% of the market or 7.1 million.
Forbes
08-04-2025
- Automotive
- Forbes
U.S. Tariffs Might Slash European Auto Sales By 20%
Mercedes-Benz GLC (Photo by Sjoerd van) Europe's auto exports to the U.S. could fall by just over 20% or 200,000 vehicles in 2025 if the new 25% tariff lasts for the whole year, French automotive consultancy Inovev said. The new tariff started April 3. It replaces the previous tariff of 2.5%. Inovev estimated total exports last year were just over 900,000, led by the Mercedes GLC, and Volvos XC90 and XC60. Volvo is owned by Geely of China. The U.S. is Europe's biggest auto export market, followed by Turkey with just over 600,000 and China's close to 500,000. European sales to the U.S. – the EU plus the U.K., were around 970,000 in 2018, slid to just over 700,000 in 2022, and have climbed steadily since then, according to Inovev. 'The leading exporting automakers are the Germans, with 26% from Volkswagen brands, 24% from Mercedes and 10% from BMW. This is followed by the Geely Group's Volvo and Tata Group's Jaguar Land Rover with 12%,' Inovev said in a report. Land Rover Defender The X1 is BMW's top seller in the U.S., followed by the 4 Series. The new Land Rover Defender is JLR's top seller, followed by the Range Rover and Range Rover Sport. JLR announced last week it will pause shipments to the U.S. for a month, as it considers how to handle the cost of the 25% tariff. "As we work to address the new trading terms with our business partners, we are taking some short-term actions, including a shipment pause in April, as we develop our mid-to longer-term plans," JLR said in a statement. JLR sells about 100,000 vehicles a year in the U.S., its largest market. Total JLR sales are around 400,000. JLR reportedly has about two months of supply already in the U.S, which wouldn't be subject to the new tariff. Audi has also suspended U.S. shipments. In the report, Inovev pointed to the uncertain nature of the situation. 'What impact could this new additional tariff have on European exports to the USA? It will initially depend on the duration of this measure: 1 month? 1 year? More? The duration of this measure could depend on the pressure that could be exerted both by carmakers on American soil and supply chains, but also by the distributor network which risks seeing a drop in sales in the short term, in the event that there is no buying transfer to models produced on American soil,' Inovev said. BMW iX1 electric SUV (Photo by Sjoerd van) "In addition, the rate of this surcharge could also vary over time if negotiations open between the USA and Europe. If this additional tariff were to run throughout 2025 at a constant rate of 25%, Inovev estimates that exports could decrease by 200,000 compared to 2024.' If the tariff continued through 2025 or into 2026 automakers might open new factories in the U.S. or transfer European production to existing U.S. factories. VW subsidiaries Porsche and Audi could move some production to its U.S. factory in Chattanooga, Tennessee. Mercedes has a U.S. factory in Tuscaloosa, Alabama, BMW in Spartanburg, South Carolina and Volvo in Charleston, South Carolina.
