$100 billion later, autonomous vehicles are still a car-wreck
The self-driving car fraud was great business for Uber and Tesla.
Autonomous vehicles were always a shell-game. The last time I wrote about them was a year ago, when Uber declared massive losses. Uber’s profitability story was always, “Sure, we’re losing money now, but once we create self-driving cars, we can fire our drivers and make a bundle.”
But Uber never came close to building an AV. After blowing $2.5b, the company invented a car whose mean-distance-to-fatal-crash was half a mile. Uber had to pay another company — $400 million! — to take the self-driving unit off its hands.
It’s tempting to say that Uber just deluded itself into thinking that AVs were a viable, near-term technology. But $2.5b was a bargain, because it allowed the company’s original investors (notably the Saudi royals) to offload their Uber shares on credulous suckers when the company IPOed.
Likewise Tesla, a company that has promised fully self-driving autonomous vehicles “within two years” for more than a decade. The story that Teslas will someday drive themselves is key to attracting retail investors to the company.
Tesla’s overvaluation isn’t solely a product of the cult of personality around Musk, nor is it just that its investors can’t read a balance-sheet and so miss the fact that the company is reliant upon selling the carbon-credits that allow gas-guzzling SUVs to fill America’s streets.
Key to Tesla’s claims to eventual profitability was that AVs would overcome geometry itself, and end the Red Queen’s Race whereby adding more cars to the road means you need more roads, which means everything gets farther apart, which means you need more cars — lather, rinse, repeat.
Geometry hates cars, but Elon Musk hates public transit (he says you might end up seated next to “a serial killer”). So Musk spun this story where tightly orchestrated AVs would best geometry and create big cities served speedy, individualized private vehicles. You could even make passive income from your Tesla, turning it over to drive strangers (including, presumably, serial…