Elon Musk’s Event Almost Nobody Was Invited To | The Brainstorm 148

Sam (0:00)

AGI's been here, the singularity has started, and now we are at least four steps in, four human steps in.

Brett (0:07)

But if they're competing with Uber and they're able to charge even $1.50 a mile, we think the Cybercab could cost around 25 cents a mile to operate.

Sam (0:15)

So many cool things happened this week. Cybercab, AGI, Millennium Problems being solved, and Twitter spats that follow. Another researcher claiming that AI's gonna kill everyone and quitting their job. And then, of course, the Apple debut, are they raising the stakes in AI or are they folding?

Let's start with Cybercab. Brett, what do you want to take away from this event?

Brett (0:46)

Well, so Cybercab, we have other content. Tasha is talking about Cybercab here, but the launch event is, hey, this is a two-seat, zero steering wheel, zero pedals vehicle that they are putting out into the world, and it's running around on a per-mile basis half the cost of an Uber, which is, we think it will actually probably get even cheaper over time, and the Cybercab is clearly Tesla's push into the robotaxi future. This is a vehicle that was designed specifically for robotaxing around, meaning you can make all kinds of neat engineering optimizations if you're going to try to reduce cost per mile as aggressively as possible for robotaxi. Now, cost per mile is different from price per mile. So there's this controversy that's out there of why on earth would Tesla sell these Cybercabs? Why would they let other people have them if they're going to be so lucrative to the business? Why not own them themselves? And I want to clear this up for people. So the way this is going to work is Tesla is going to charge a platform fee just like Uber does. The platform fee will be some percentage cut of the gross revenue that people go.

Tesla will want the people who buy Cybercabs to get a good return on capital and they'll own some themselves and they can control the return on capital that people get by changing that platform fee. But if they're competing with Uber and they're able to charge even $1.50 a mile, we think the Cybercab could cost around 25 cents a mile to operate. There's $1.25 per mile that Tesla can keep some for itself and give others to Cybercab owners.

And so if you are operating the vehicle at 25 cents a mile and you get 5 cents a mile on top of that, that's a 20% return on every mile that it's operated. A platform asset owner would be super happy with that kind of return. Meanwhile, that still leaves $1.20 a mile for Tesla to embed into its own profitability. So I think they'll manipulate the mix over time, but that's the solution to the puzzle of like, why is Tesla selling these Cybercabs? I think they want people to be able to operate these assets, particularly holding them for their own use during non-search periods, but then getting induced in during search periods to provide them to the system as a whole. And I think these things are going to be everywhere, and they're going to make sure that they appear everywhere. Tesla is going to treat those asset owners as favored customers who can get an abnormally high return on their investment because there's so much lucrative economics in the business generally, and Tesla can be so profitable on the back end of facilitating Cybercab miles. So that's my take on why they're selling them. Sam, what did you think about it and how quickly is this stuff going to happen?

Sam (3:49)

AI infrastructure as a service like returns, but just other infrastructure, transportation infrastructure as a service returns. I thought it was extremely interesting to hear all about the unboxed process here. Over six miles per kilowatt hour of energy, so a hyper efficient vehicle. Back in the day, we showed the progress and where we thought it was going to get.

I remember us having a conversation saying, is it really going to get that high? That seems like maybe it's too much. Here we are, no brake fluid, so total electric actuation of the brakes, another design choice to reduce complexity in manufacturing.

I think the cost is going to surprise people, right? Obviously, there's going to be a ramp up that's going to be more painful than even Elon expects as is customary. And then the end result is going to be more mind blowing than people can imagine. I think it was interesting.

Brett (5:01)

Yeah, I think there's this, just imagine what you can do to cost-optimize a vehicle per mile when you're designing to Cybercab, and how when you're competing against a company like Waymo that is taking off-the-shelf products and then super gluing sensors onto them, kind of the difference in optimizations you can make. So the Cybercab doesn't have to have a consumer-acceptable range. It has to have a range that is just sufficient to meet the intended operating conditions over the course of a day before getting back to charging.