Tesla Will Use Model 3 Lease Returns For Its Own Autonomous Ride-Hailing Network

Published on April 12th, 2019 |
by Kyle Field

April 12th, 2019 by Kyle Field

Tesla broke the news on its blog today that it would be using lease returns from its new Tesla Model 3 lease program in “the Tesla ride-hailing network.” The blog post is the second confirmation that Tesla will actually own and operate its own fleet of fully autonomous ride-hailing vehicles, with the first note along these lines coming years ago on a quarterly Tesla conference call.

“Beginning today, customers in the U.S. will be able to lease Model 3 for a small down payment and competitive monthly payments. Customers can choose any Model 3 variant and select an annual mileage option of 10,000, 12,000, or 15,000 miles.

“Please note, customers who choose leasing over owning will not have the option to purchase their car at the end of the lease, because with full autonomy coming in the future via an over-the-air software update, we plan to use those vehicles in the Tesla ride-hailing network. Customers can visit tesla.com/3 now to lease a Model 3.”

Previous to today’s announcement, Tesla had spoken of its fully autonomous “Tesla Network” a few times but primarily did so in the context of allowing owners to add their vehicles to the fully autonomous network when their vehicles were not in use. From Tesla’s Master Plan, Part Deux:

“You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you’re at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost.”

The news today emphasizes that the reach of the Tesla Network will include a fleet of Tesla-owned and Tesla-operated vehicles running around town. The new business model will see Tesla running head first into a market dominated by Uber and Lyft, but without the overhead of a driver. Conversely, Tesla will be running a hybrid business model that will see Tesla-owned vehicles operating side by side with privately owned Teslas for customers’ business. The shift in tactics makes a lot of sense and could see Tesla becoming the first in the ride-hailing industry to actually turn a profit.

Waymo has been pushing forward in this direction and already has a pilot up and running in the greater Phoenix area, but is saddled with the full capital cost of having to develop its own autonomous vehicle solution. Its solution is being bolted onto Chrysler Pacificas that only add to the capital requirement. Tesla, on the other hand, will use its own vehicles, ones that have already had their most expensive depreciation paid for by lessees.

The Tesla Network is not a sure win for Tesla, but does signal that the company continues to ramp up its investment in its in-vehicle software solutions. Its Autopilot and Full Self Driving software packages form the foundation for a new company-owned ride-hailing network as well as a customer-owned ride-hailing network. As the vehicle manufacturer, it appears that gives Tesla a leg up on anyone else currently doing business in the space. That is, if Tesla can deliver on its promise of a “feature complete” Full Self Driving solution by the end of 2019 and a fully baked, “set it and forget it” Full Self Driving solution by the end of 2020.

About the Author

Kyle Field I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. TSLA investor.