A (2:38)

Part of it is regulatory. You know, we are still in a situation where we are dealing with state by state regulatory approvals needed for these autonomous vehicles and autonomous fleets to be built. We'll see if that changes. But for now it's state by state regulation. After that it comes down to technology. And each of the platforms needs to prove that their autonomous offerings are significantly safer than human driving. That is also linked to regulatory approval. And so when we think about fleets becoming safer, proving that they can drive people more miles without having an accident than even a human can, we think about the autonomous players then scaling up their fleets to make the cars and fleets available to more people. That is sort of the flywheel that we think is going to play out throughout 2026. The other part that we're very focused on across all the players is the cost of the cars. And there is a big difference between the cost of a Waymo per mile versus the cost of a Tesla per mile. And we think one of the tension points, Andrew, that you can talk about a little bit here is the difference in the safety data and what we see on Tesla as of now versus Waymo versus the cost advantage that Tesla has. So talk about the cost advantage that Tesla has through all this as of right now.

B (4:00)

Yeah, definitely. So, you know, as you mentioned, Tesla today has a very clear cost advantage over many of the robo taxi peers that they're competing with. A lot of that's driven by their vertical integration and their sensor suite. Right. So their vehicle, the cost of their vehicle is, call it $35,000. You've got the camera only sensor approach, so you don't have lidar, expensive lidar and radar in the vehicle. And that's just really driven meaningful cost improvement and cost advantage. On our Math, about a 40% cost advantage relative to Waymo today. Now going forward, you know, as you mentioned, I think the key hurdle here or bottleneck that Tesla still needs to prove is their safety and can they reach the same safety standards as a human driver. And you know, the improvement that you've seen from Waymo, you know, to put some numbers around this based on publicly available data in Austin, Tesla's getting in a crash, you know, every about, call it every 50,000 miles. Waymo is closer to every 400,000 miles per crash. So today Waymo is the leader on safety. I think the one important caveat that I want to mention here is that's on a relatively small number of miles driven for Tesla, they've only driven about 250,000 miles in Austin, whereas Waymo has driven close to, I think, you know, 100 million miles cumulatively. So when you look back, I think this is going to be the kind of key catalyst and key data point for investors to watch is how that data improves over the course of 2026. If you track Waymo, Waymo's data improved substantially as their miles driven improved and as they launched into new cities. We'd expect Tesla to follow a similar trend, but that's going to be a huge catalyst in validating this camera only approach. If that happens. Tesla's not limited in scale, they're not limited in manufacturing capacity. You can meaningfully see them expand, or you can see them expand quite quickly once they prove out that safety requirement.

A (5:49)

I think it's a great point because, you know, one of the other big debates that we are all going to have to monitor in the AV space throughout 2026 is how quickly does Tesla completely pull the safety drivers and how quickly do they scale up production of the vehicles? Because one of the bank shots around autonomous driving is actually the rideshare industry. We have partnerships, some partnerships between Waymo and Uber and Waymo and Lyft, but Tesla is not partnering with anyone. And so I think the extent to which we see a faster than expected ramp up in deployment from Tesla can have a lot of impact, not only on autonomous adoption competition with Waymo, but also the rideshare industry. So how do you think about the puts and takes on Tesla and sort of removing the drivers and scaling up the fleet this year? What should we be watching?

B (6:42)

Yeah, so they've already made some strides there in Austin. They've pulled the safety monitor. They haven't opened that up to the public yet. Without the safety monitor. They're still testing. Presumably in that geography, they need to be extremely careful in terms of, you know, the regulatory compliance and making sure they're doing this in a safe way. Ultimately, that's what matters most to them. We do expect them to roll it out to the public without the safety monitor in 2026. Whether or not that's the first quarter or the third quarter is a little bit tougher to predict, but I think it's reasonable to assume whatever the timeline is, they're going to make sure that's the safest way possible to ensure that there's no unintended consequences as it relates to regulation, etc. You know, I think one important data point or interesting data point here, you know, we model, I think, 100% CAGR in miles driven, autonomous miles driven through 2032. You can talk a little bit about, you know, what the implications for rideshare, but I think it's important to contextualize that that would still only represent less than 1% of total US miles driven in the US so substantial growth over the next, call it six or seven years, but still a massive TAM to be tapped into beyond 2032. And I think the key there is what's the cost reduction roadmap look like? And can we get robo taxis to a point where, where they are cheaper than personal car ownership? And could robo taxis at some point disrupt the car ownership process?

A (8:03)

Yeah, and the other more important point around rideshare will be how much do these autonomous offerings expand the addressable market for rideshare and prove to be incremental as opposed to being cannibalistic on existing rideshare rides? Because you're right that, you know, even our out year autonomous projections still have it less than 1% of the total trips. But the question is, how much does that add to rideshare? Because in some scenarios those autonomous trips could end up being 20 to 30% of the rideshare industry. This matters for Uber and Lyft because while they are partnering Waymo and other autonomous players across a handful of markets, they're not partnered in all the markets. And in some markets Waymo is going alone, Tesla is going at it alone. And so when we look at our model and we say as of 2024, Uber and Lyft make up 100% of the rideshare industry, based on the current partnerships, which includes Waymo and Tesla and all in Zoox and all the players, we think that Uber and Lyft will only make up 30% of the autonomous driving market. And so it's really important for the rideshare industry that number One, we see AVs being incremental to the TAM and, and two, that Uber and Lyft are able to continue to add more partnerships over time to drive more of that overall long term AV opportunity and participate in all this rideshare industry over the next five years.

B (9:29)

I think it's really clear that the future of autonomous vehicles is here and we've reached an inflection point and there's a lot of interesting catalysts and data points for us and for investors to watch for throughout 2026. So, Brian, thanks again for taking the time to talk.

A (9:43)

Andrew, great speaking with you and thanks for listening. If you enjoy thoughts on the market, please leave us a review wherever you listen and share the podcast with a friend or colleague today.

C (9:55)

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