How much value will Tesla’s robotaxi create? This will become a serious question if Elon Musk follows through on his plans to unveil the robotaxi in August, because Tesla will have a unique opportunity to help define the price model for a new category of door-to-door transportation. This new vehicle unlocks significant potential value for passengers because it will have no driver, no driver’s seat, and no steering column.
It can reduce the risk of surge pricing, often caused by a lack of drivers, not vehicles, during a supply-demand imbalance. It can provide consistently high service levels and reliability, something you can appreciate if you have ever given a ride-share driver a low rating. It can offer the riders additional space and amenities because of new design opportunities. Finally, it can lower the overall out-of-pocket costs because there is no driver to tip.
Offsetting those benefits is the apprehension riders may have in ceding control to Tesla’s full self-driving (FSD) platform, which may be a deal-breaker for some people at first. I call this a new category of transportation because that value ladder and overall experience is sufficiently different from any other prevailing model for door-to-door transportation. It follows, then, that the fleet operator of the robotaxis shouldn’t default reflexively to the pricing model for a taxi (fixed-rate pricing by distance), a rental car (variable pricing by time), a ride share (dynamic pricing), or a Zipcar (subscription plus usage).
Just like the pricing for new categories such as generative AI (GenAI) tools and applications, the pricing strategy and pricing models for a robotaxi should depend on a thorough understanding of the three information sources for any major pricing decisions: customer value created, the competitive landscape, and the economics of the product or service. Analogous to experimentation with GenAI, Tesla has a strong incentive to encourage passengers to experiment with the robotaxi, establish their own comfort level with FSD, and gain first-hand experience with its range of potential benefits. Now we need to wait and see what Elon Musk unveils four months from now. #pricing #pricingstrategy #surgepricing #transportation #pricingmodels #automotive https://lnkd.in/gkc5T2b7
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