Tesla CEO Elon Musk recently stated that the company is willing to license it's self-driving tech to other brands. Yahoo Finance Live breaks down how such a move might impact the EV market at large.
PRAS SUBRAMANIAN: Pivoting to something a bit more interesting in my world, Elon Musk--
[LAUGHTER] --said that he--
SEANA SMITH: You didn't like our discussion?
PRAS SUBRAMANIAN: No, I think we could keep talking about it more and more. And I know Elon Musk has-- also has his past with the Saudis, as well, in terms of taking his company private. So--
AKIKO FUJITA: That's a good way to connect the two topics, yes.
PRAS SUBRAMANIAN: Yeah, yeah. Yeah, [? 420, ?] love it. So Musk said he could be open to licensing some of Tesla's self-driving features. This effort-- GM CEO Mary Barra said that it would be hard to find cheap EVs in the $30,000 to $40,000 range profitable by the end of the decade, even-- maybe even beyond that.
So Musk said, hey, we've been-- we'll do whatever it helps to make EV adoption come on here. We'll license our technology for FSD. We'll do things like that. We've already opened up the Supercharger network, you know. So Musk says he's very charitable here, but they're licensing that technology. They want to make money off it. They want to keep the data on that.
AKIKO FUJITA: You know what my first question was on this? Do you want to license this technology? If you're a competitor, when you consider the problems that autopilot has had--
PRAS SUBRAMANIAN: Right, right.
AKIKO FUJITA: --do you want that technology integrated?
PRAS SUBRAMANIAN: I mean, FSD, right, for all its issues, it has been improving slightly, but it's still under a full NHTSA investigation for safety, right? This is not-- this is a-- kind of a software that has a kind of a cloud around it. And, of course, Musk says, well, we'll license you. We'll take the money, you know?
AKIKO FUJITA: I mean, it is interesting. I think that speaks to sort of how Elon Musk has evolved around this. We talked about the recent partnership with Ford. He's sort of opening things up because the competition is increasing, right? And there are other channels for revenue. I mean, is that the way to look at it?
PRAS SUBRAMANIAN: I mean, it's a pure "I'm such a good guy, but let me make some money off you, too," right? That's the way I see it.
SEANA SMITH: Or is it also just the fact that maybe Tesla is in a little bit more trouble on the demand side of things than many have really taken into account or realized at this point? We know their profit margins have been under pressure, have been under pressure now for a couple of months, as Musk has lowered the price of their EVs in order to entice some of those buyers. So now he's exploring even more avenues, new avenues here of revenue. Paints maybe a dire picture? I don't know.
- Well, I don't know because I wonder how much they've been looking into this all along, right? And when you think about what the value prop has sort of been for Tesla from the beginning, would be that they were the initial runner in the EV space, and then people are going to want to buy their tech.
They're going to want to use their chargers. They're going to want their battery packs, so sort of creating that overall EV world. And maybe they've been operating like that all along, and Musk just-- I feel like sometimes when Musk tweets these things, he just wants you to remember that it's a possibility.
AKIKO FUJITA: I mean--
- It's like, hey, we could sell this, by the way.
AKIKO FUJITA: I do wonder-- the other consideration, and I'd be curious to get your thoughts, is that it is such a crowded space. So we're focused on Elon Musk because Tesla has been the leader in the space. But at the end of the day, does there need to be more collaboration? Because the question for long has been, can all these car companies survive anyway? Is there a way to improve the technology, bring down the cost, and does that require more collaboration?
PRAS SUBRAMANIAN: I think it was Doug Field from Apple engineer, now at Ford, said, this is going to be the hardest problem in our generation to solve is autonomous driving. So it is a big issue that maybe multiple companies to come together to figure out.
But if you're Tesla, you're loving-- you would love to license this technology. I mean, they want to hit 80% margins on that. What better way to do that than have another company just pay for your technology? So I think that it's a "pie in the sky" thing for him to think that GM would want to pay for that. But we saw Ford-- they shut down Argo. They would be another potential partner there for that. So we'll see.