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Illustration: Aïda Amer/Axios

Tesla CEO Elon Musk is banking on a risky new strategy for the electric automaker: a robotaxi service that he argues will transform Tesla into a $500 billion company.

The big picture: Like other AV companies, Musk is fixated on a potential $3 trillion market opportunity for autonomous mobility as a service.

  • But while most say fully self-driving cars are still a decade away, Musk is telling investors they'll be here by next year and that Tesla will have first mover advantage with a million robotaxis on the road.

Between the lines: Investors are eager to fund his plans — witness last week's fresh $2.7 billion equity and bond deal.

  • Musk's track record is spotty, though — even he admits to blowing his self-imposed timetables — but in the end, he insists, "I get it done."
  • Still, his latest idea — for Tesla owners to rent out their cars via a vast Tesla robotaxi network — seems "half baked," as Cowen analyst Jeffrey Osborne put it to CNBC.

Driving the news: Musk touted the Tesla car-sharing network at an investor event on April 22.

  • Then, according to CNBC and Bloomberg, he doubled down a week later on a private investor call, saying AVs are now the fundamental driver of value for Tesla and making his case for that $500 billion market cap.

How it will work, according to Musk:

  • Tesla owners can offer their cars for rent on Tesla's car-sharing network.
  • They could pocket up to $30,000 a year (Tesla would keep 25% to 30% ) and their cars will rise in value — up to $250,000 within 3 years, Musk claims — as more self-driving capabilities are added via software updates.
  • Tesla would supplement the fleet with company-owned cars as needed.

Yes, but: The economics of the plan seem dubious and there are a host of serious legal, logistical and technology questions that remain unanswered.

  • Tesla says it made a technological leap by replacing a Nvidia processor with a new proprietary AV computer chip, which will enable self-driving capabilities starting in 2020.
  • "I feel very confident predicting autonomous robotaxis from Tesla next year. Not everywhere. But we will have regulatory approval somewhere," Musk says.
  • But there are no federal regulations on AVs and no prescribed validation methods, so states are still trying to figure out how to govern self-driving cars.

What they're saying:

  • The new focus on autonomy could push out the path to profitability even further, Barclays analyst Brian Johnson wrote in a research note Tuesday.
  • Patient investors will be rewarded, ARK Invest analyst Tasha Keeney tells Axios. "It's not too wild to say the company be worth $500 billion in the next 5 years."
  • "Let's count how many truly autonomous (no human safety driver) Tesla taxis (public chooses destination & pays) on regular streets (unrestricted human driven cars on the same streets) on December 31, 2020. It will not be a million. My prediction: zero. Count & retweet this then," tweeted robotics pioneer Rodney Brooks.

My thought bubble: Tesla's strategy is far-fetched, but plausible, if, as Osborne says, they are better than GM at manufacturing, better than Nvidia at hardware, better than Google at software, and better than Uber at running a taxi service. That's a lot of ifs.

Go deeper: Teslas are among the most popular cars rented on Turo

Go deeper

Stalemate over filibuster freezes Congress

Illustration: Sarah Grillo/Axios

Senate Majority Leader Chuck Schumer and Mitch McConnell's inability to quickly strike a deal on a power-sharing agreement in the new 50-50 Congress is slowing down everything from the confirmation of President Biden's nominees to Donald Trump's impeachment trial.

Why it matters: Whatever final stance Schumer takes on the stalemate, which largely comes down to Democrats wanting to use the legislative filibuster as leverage over Republicans, will be a signal of the level of hardball we should expect Democrats to play with Republicans in the new Senate.

Dave Lawler, author of World
2 hours ago - World

Biden opts for five-year extension of New START nuclear treaty with Russia

Putin at a military parade. Photo: Valya Egorshin/NurPhoto via Getty

President Biden will seek a five-year extension of the New START nuclear arms control pact with Russia before it expires on Feb. 5, senior officials told the Washington Post.

Why it matters: The 2010 treaty is the last remaining constraint on the arsenals of the world's two nuclear superpowers, limiting the number of deployed nuclear warheads and the bombers, missiles and submarines which can deliver them.

Updated 2 hours ago - Technology

Facebook refers Trump ban to independent Oversight Board for review

Photo: Alex Edelman/AFP via Getty Images

Facebook's independent Oversight Board has accepted a referral from the platform to review its decision to indefinitely suspend former President Trump.

Why it matters: While Trump critics largely praised the company's decision to remove the then-president's account for potential incitement of violence, many world leaders and free speech advocates pushed back on the decision, arguing it sets a dangerous precedent for free speech moving forward.

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