Prominent short seller Jim Chanos has criticized Tesla’s robotaxi economic projections, calling the figures “ridiculous” due to several overlooked cost factors.
What Happened
Chanos pointed out that roughly half of all ride-hailing miles are “dead” (non-revenue) miles. Additionally, commercial auto insurance costs are significantly higher than personal auto insurance, ranging from 30-40 cents per mile. Other expenses, such as cleaning costs of $400 per month, were also highlighted.
Overlooked Expenses
Chanos argued that the major cost for a Robotaxi fleet would be redundancy, safety, and monitoring, which could range from $0.05 to $2.35 per mile, depending on regulations. He also questioned the viability of Tesla’s projections, noting that the entire US taxi and ridesharing market is expected to be valued at $50 billion to $75 billion in 2024.
Revenue Projections
When challenged about potential higher revenue, Chanos expressed doubt, citing consumers’ ability to “operate their own vehicles at a marginal cost of 50-60 cents per mile”. He also noted that “commoditized service markets tend to converge revenues to marginal cost”.
Tesla’s Robotaxi Launch
Tesla has been preparing for its limited robotaxi launch in Austin this June, with CEO Elon Musk announcing plans to deploy only 10-20 vehicles initially. The company has already launched an employee-only autonomous ride-hailing service in Austin and San Francisco, completing over 1,500 trips covering 15,000 miles.
Skepticism Surrounds Tesla’s Readiness
Investor Gary Black recently described the upcoming launch as “an experiment” rather than a true market test, citing the limited deployment and “asymmetry of risks”. Former Waymo CEO John Krafcik has also questioned Tesla’s readiness for autonomous taxi operations.
Tesla’s Testing Efforts
Despite skepticism, Tesla has intensified testing efforts with approximately 300 drivers in Austin under “Project Rodeo”, while collaborating with local emergency services and developing its robotaxi app for the planned June 1 launch.
Conclusion
Tesla’s robotaxi financials have been called into question by prominent short seller Jim Chanos, who highlights several overlooked cost factors. With Tesla’s limited robotaxi launch approaching, it remains to be seen how the company will address these concerns and prove the viability of its robotaxi service.