Tesla's use restrictions for autonomous driving

screen-shot-2016-11-18-at-1-52-56-pmAt a conference last week on the sharing economy (video here), an audience member asked me about the following clause in Tesla’s autonomous driving agreement:

Please note also that using a self-driving Tesla for car sharing and ride hailing for friends and family is fine, but doing so for revenue purposes will only be permissible on the Tesla Network, details of which will be released next year.

Isn’t that interesting? What it means that if you want to use your Tesla with Uber or Lyft, then you can’t have it drive autonomously.

Now Tesla isn’t a firm that has market power so they are allowed to put any restrictions they want. But I wondered what this restriction’s purpose was. Tesla had previously announced that they saw a future where Tesla owners put their autonomous cars on a ride sharing network rather than, say, leave them parked somewhere. So this is likely related to that. But if Tesla’s business is selling cars, why should it care precisely how its customers use it. After all, this restriction will lower sales of Tesla vehicles.

It could be that the network they have in mind may integrate more tightly with autonomous driving than we can currently imagine. In this case, Tesla may simply not be able to operate autonomous driving without that restriction. But since people can drive Tesla’s autonomously without sharing that seems rather odd too.

So I have to say that I don’t get it. The restriction does not seem to have an obvious consumer benefit and seems to needlessly target existing ride sharing companies. And I cannot see how Tesla gains a data advantage or something similar by preventing ‘commercial’ ride sharing. Perhaps it is a liability thing but if it is that why not just say that?

One Reply to “Tesla's use restrictions for autonomous driving”

  1. Hey Josh. Isn’t it likely that Tesla intends to operate a ridesharing service based on automously driven Teslas, and that it wants to set that expectation from the start rather than try to impose a restriction later when it might conceivably have dominance (especially if enforcers try to define a separate market for autonomous ridesharing), and the change may trigger antitrust complaints from competitors that built businesses/made investments around Tesla’s autonomous vehicles? Tesla has always seemed to have grander ambitions than just selling cars, and while one might expect subsidies/permissive policies in order to build platform adoption initially, the “change in business model/product design” fear I mention above is not at all far-fetched, and it may feel that adoption is/will be extensive enough that a marginal reduction in sales is worth it. Does that not provide a sufficiently logical explanation (assuming the assumptions are accurate, which, of course, they may not be)?

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