Tesla to launch ride-hailing service with self-driving cars

by Samuel Abasi Last updated on April 24th, 2019,

Tesla says it will introduce a ride-hailing service with no humans driving the vehicles.

CEO Elon Musk and others detailed the company’s plans to have self-driving vehicles operational by next year at an event for investors Monday.

Musk says Tesla’s self-driving software is storing images and learning at an exponential rate. He’s confident Tesla will get regulatory approval for the service sometime next year as well.

Tesla would allow owners to use their smart phones to put their cars into the ride-hailing service while they’re not being used. The company would take 25% to 30% of the fare. Musk says Tesla would provide vehicles in areas where not enough people share their cars.

Elon Musk, Tesla’s chief executive, has made plenty of bold predictions. They don’t always come true.

On Monday, Mr. Musk said the company was on the cusp of making cars that could drive themselves safely on any road. He also promised that the company would begin operating a fleet of driverless “robo taxis” by the end of next year.

“I’m very convinced,” Mr. Musk said in a presentation to analysts at the company’s headquarters in Palo Alto, Calif. “In the future, people will want to outlaw people driving their own cars because they’ll be unsafe” compared with autonomous vehicles.

Many auto executives and analysts think Mr. Musk is being wildly optimistic and say cars that can drive themselves at all times are at least several years away.

“The idea that you can have a vehicle that can make complex decisions for full self-driving is just not plausible at this point,” said Mike Ramsey, a Gartner analyst.

If Mr. Ramsey is correct, it wouldn’t be the first time Mr. Musk has gotten ahead of himself. The chief executive once forecast that Tesla would make 500,000 cars in 2018, but it produced half that many. Last summer, he said Tesla would make 10,000 Model 3 sedans a week — about twice the number currently coming off the assembly line.

Mr. Musk had also promised a Model 3 for $35,000, which spurred tens of thousands of people to put down $1,000 deposits long before production had started. Tesla recently began making that car, but customers can order it only on the telephone or by visiting a store, not online, the way most customers prefer to buy its cars.

In the presentation on Monday, Mr. Musk and other executives described the technologies that the company is developing to allow cars to drive themselves, building on the Autopilot system that it has offered for several years.

He said Tesla had developed “the world’s fastest computer” for use in self-driving cars, able to conduct 144 trillion operations per second. Nvidia, a leading maker of chips for automotive use and a former supplier to Tesla, disputed that claim, saying it had a computer that can run 320 trillion operations per second.

Mr. Musk also said Tesla is developing “neural networks” of computers that can mimic the human brain and will enable driverless cars to operate safely using only cameras and radar sensors. Most other automakers are relying on cameras, radar and a type of laser-based radar known as lidar.

Other car companies have recently acknowledged that the development of self-driving technology is going to take longer than they had previously thought.

“We overestimated the arrival of autonomous vehicles,” Jim Hackett, Ford Motor’s chief executive, said this month in Detroit.

Mr. Musk’s lofty prognostications about self-driving cars and the new business of robo-taxis came as investors are bracing for troubling news from the electric carmaker. On Wednesday, Tesla is expected to report a loss for the first quarter amid slumping sales. The company previously said it delivered 63,000 cars in the quarter, down 31 percent from the fourth quarter, despite beginning sales of its Model 3 sedan in Europe and China.

Wall Street analysts are also concerned that Tesla does not have enough cash on hand. It ended 2018 with $3.7 billion, but used nearly $1 billion for a payment to bondholders in March. It recently said its cash reserve was “sufficient.”

Tesla stock closed down nearly 4 percent on Monday, suggesting that many investors were skeptical about Mr. Musk’s predictions about self-driving cars.

Investors were also spooked earlier in the day when Tesla said it was sending engineers to China to investigate why one of its cars appeared to spontaneously combust while parked in a Shanghai garage. Electric vehicles are powered by lithium-ion batteries that can burn if they are damaged or subjected to high temperatures in what is know as “thermal runaway.”

Just last week, a parked Tesla caught fire at a service center near Pittsburgh. The car had previously caught fire in February, according to a local news report. In February, a man was killed in Florida when the Tesla he was driving crashed and was engulfed in flames.

Tesla introduced Autopilot in October 2015. It scans the road for obstacles and other vehicles, and can brake, accelerate and even pass other vehicles with little input from the driver. It tracks lines on highways to stay within lanes.

Yet it has come under scrutiny in at least four fatal crashes. In 2016, an Ohio man was killed when his Model S crashed into a tractor-trailer crossing a highway in Florida. Autopilot failed to recognize the truck and neither it nor the driver applied the brakes. While one federal safety agency found no technological defect in Autopilot, the National Transportation Safety Board concluded that the system “played a major role” in the crash.

Another accident in which a Tesla collided with a tractor-trailer occurred in Florida earlier this year. In 2018, a California man was killed when his Tesla Model X crashed into a concrete barrier on a highway. And in 2016 in China, a Model S ran into a street sweeper, killing the Tesla’s driver.

Despite Mr. Musk’s proclamations about Autopilot’s capabilities, owners’ manuals warn Tesla drivers that the system “cannot detect all objects and may not brake/decelerate for stationary vehicles, especially in situations when you are driving over 50 m.p.h.” In-car warnings also remind drivers that despite its name, Autopilot is only a driver-assistance system and is not intended to pilot cars on its own.

While Tesla is developing self-driving systems that use only cameras and radar to scan roads and identify obstacles, other companies, including Waymo, the autonomous-car division of Google’s parent company, also use lidar.

Mr. Musk dismissed lidar as “friggin’ stupid” on Monday.

Randy Reibel, chief executive of Blackmore, a maker of lidar systems for cars, disagreed. “With radar you can see something on the road, but you can’t tell how big it is,” Mr. Reibel said. “Cameras can tell you what something is, but not how far away it is. With lidar, you can see an apple or a brick on the road and know it’s an apple or a brick.”

Even lidar is not foolproof. In 2018, a self-driving, lidar-equipped vehicle being tested by Uber hit and killed a pedestrian crossing a road at night in Tempe, Ariz.

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