Tesla Inc. Chief Executive Elon Musk made his case for an on-demand robot taxi fleet that he promised would begin next year, an ambitious bet that would thrust the auto maker into the cutthroat business of ride-hailing.
In a presentation on Monday to investors and analysts at company headquarters in Palo Alto, Calif., the billionaire entrepreneur said that by the middle of next year more than a million Tesla vehicles on the road will have the capability of operating without a human driver. He expects regulatory approval in at least one market that would enable a robot taxi service by the end of 2020. Mr. Musk envisions owners of Tesla vehicles pushing a button on a smartphone app to put their vehicles into commercial service and pick up riders on the company's network.
Tesla would then collect 25% to 30% of the fee charged for riders, much like Uber Technologies Inc. and Lyft Inc. do. Only Tesla vehicles would work on the company's ride-hailing network, he said. Tesla would be able to turn on the self-driving software feature of most of its vehicles remotely. Mr. Musk said he expected the net present value of a single car in the fleet to be worth around $200,000.
“The fundamental message that consumers should be taking today is that it's financially insane to buy anything other than a Tesla,” Mr. Musk said. Mr. Musk's plan drew quick skepticism from some analysts. “I think regulators will be very cautious on this,” said David Whiston, an analyst at Morningstar Research Services.
Investors who attended the Tesla event were able to take test drives in vehicles with the latest self-driving technology. One investor attendee, Ross Gerber, chief executive of Gerber Kawasaki Wealth & Investment Management, said the technology worked well as the car steered around bikers in the city streets.
Mr. Musk's predictions come as Tesla prepares on Wednesday to reveal its first-quarter financial results, which are expected to show a loss on slumping sales, raising questions about the demand for the company's Model 3 compact car.
Mr. Musk's confidence in the technology and the timeline he is laying out stands in contrast to others working to develop similar efforts. He is promising by next year a selfdriving car that can operate entirely without a human and not be confined to any area.
Other auto makers and tech companies largely say that driverless technology will be first deployed in fixed areas. Ford Motor Co. Chief Executive Jim Hackett earlier this month said the industry overestimated the arrival of autonomous vehicles and that Ford's first application for the technology will be narrowly applied in 2021 “because the problem is so complex.”
BY TIM HIGGINS