Tesla Robotaxi Will Kill Uber – Gig Workers Aren’t Ready for It
Tesla's Robotaxi network will change the value proposition of gig apps like Uber. Here's how autonomous driving platforms could put gig workers out of work.
Mass produced cars are arguably one of the most important inventions of the 20th century.
Cities and suburbs were built around cars. Meanwhile, culture adapted to prioritize independence and freedom. It’s not an accident that cars play prominent roles in coming of age films like Grease and Rebel Without a Cause.
More importantly, cars also play a central role in the American economy. Manufacturing is largely based around the auto industry and vehicle manufacturers are so important, they were bailed out during the 2008 financial crisis. It’s safe to say that the auto industry is a bellwether for the rest of the economy. Wherever cars go, the American economy will follow.
While most people are looking to artificial intelligence as the source of impending economic disruption – myself included – it isn’t the only technology that’s poised to reconfigure the American economy. The proliferation of autonomous vehicle testing in recent years is a not-so-subtle indicator that the economy we’ve built around privately owned, single occupancy vehicles is about to come to an end.
Tesla is the latest company to dip its toes into the race to build driverless cars. Given Elon Musk’s other ambitions, this shouldn’t come as a surprise. But unlike its competitors, Tesla is a fully integrated electric car company that could accelerate the pace of both adoption and innovation. Tesla manufactures its own hardware – cars – and the software needed to make self-driving cars a reality. Once its autonomous vehicle network comes fully online it will likely change everything from how cities are designed to how your mail is delivered.
Over the last decade, gig work has reshaped the nature of work itself. This transformation has centered around monetizing personal vehicles to transport products and people within cities. For better or for worse, companies like Uber, Lyft, Instacart, and DoorDash have created millions of new employment opportunities that didn’t used to exist.
While new technologies eventually lead to the emergence of new economic opportunities, they first destroy existing jobs. The proliferation of autonomous vehicles is going to eliminate jobs – notably gig work – faster than it creates new jobs. This not only affects gig workers currently earning a living on the gig platforms, it will also affect white collar workers who think they’ll seek economic refuge driving for Uber when AI takes their jobs.
Automation is going to remove workers from the equation entirely just as it has done in the past. But with artificial intelligence simultaneously eliminating cognitive employment opportunities, automation will likely take more jobs than the economy is prepared to lose. Workers who aren’t prepared will find themselves stranded in the new economy that’s quickly emerging.
This essay is going to dive into Tesla’s foray into autonomous vehicles. It will argue that Tesla is poised to displace incumbents in the space which will lead to the rapid acceleration of the pace of innovation and adoption. When that happens, the demand for gig workers on apps like Uber, Lyft, and DoorDash will decline. This will result in the displacement of millions of existing gig workers while eliminating the option for future displaced workers who – jokingly, or not – are banking on having gig work as an option for when they inevitably lose their jobs.
While gig work isn’t great – the average Uber driver makes between $15-$20 per hour – it’s an employment option that millions of workers rely on. If you’ve taken an Uber or Lyft, you know it’s one of the most accessible ways for immigrants to make money. And because workers don’t have to work fixed shifts, it’s the most flexible option for workers trying to balance other obligations like raising a family or going back to school.
As the supply of traditional jobs wanes, displaced gig workers will have limited options. Gig workers don’t qualify for unemployment benefits which will leave some of the most vulnerable members of society – immigrants, the disabled, students, and working parents – vulnerable to acute economic hardship.
Understanding how autonomous vehicles are developing and how Tesla could lead to faster adoption of self-driving cars can help you prepare for the future that’s beginning to emerge.
In June, Tesla plans to launch its Robotaxi network in Austin, Texas.
In 2006, Elon Musk penned a “master plan” outlining his vision for Tesla. This was three years after the company was officially founded but before the first Tesla made its way off the production line and onto American streets. In his plan Musk wrote:
The overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy.
A decade after releasing his initial plan, Musk expanded it to include something else – autonomy. In 2006, the idea of a driverless car was still largely confined to the realm of science fiction but a decade later, the technology had advanced enough where self-driving was becoming more of a possibility.
In 2016 Musk wrote an addendum to his original master plan, adding autonomy to his vision:
When true self-driving is approved by regulators, it will mean that you will be able to summon your Tesla from pretty much anywhere. Once it picks you up, you will be able to sleep, read or do anything else enroute to your destination.
You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you're at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost.
The goal of developing autonomous, self-driving cars isn’t to usher us into a dystopian robotic takeover of the world, it’s to make human civilization less dependent on fossil fuels. Autonomy simply increases the utility of cars. They can drive around town instead of being parked, generating revenue for the owners while providing a service for those who don’t own a car themselves.
While you might think it’ll be a while before autonomous cars are here, we may only be a few years away from self-driving cars becoming the new normal. Last week, Tesla announced it is testing out supervised ride hailing for some employees in Austin and the Bay Area. According to a post released on X, the objective right now is to:
This service helps us develop & validate FSD networks, the mobile app, vehicle allocation, mission control & remote assistance operations.
By June, Tesla is planning to begin offering autonomous rides in Austin as part of the rollout of its Robotaxi network. Not a Tesla App reports:
Elon has tripled down on the fact that Tesla will be launching their first autonomous robotaxi network in Austin - just two months away at this point. It seems that Tesla is fully set to launch their first fully unsupervised self-driving vehicles that will carry paying passengers in June.
Once safety issues are hammered out and Tesla gets a greenlight from regulators, Tesla owners will be able to start adding their vehicles to the Robotaxi network. Just as Elon Musk promised, your car will be able to make money for you, even while you sleep and the whole enterprise will be powered by electricity.
Tesla’s Robotaxi network will include Tesla-owned Cybercabs as well as customer-owned vehicles. This would create a nationwide fleet of millions of autonomous taxis.
Where Uber disrupted the traditional taxi service, Tesla is now on the precipice of disrupting Uber.
You’re probably familiar with the ride hailing apps Uber and Lyft. Before either of these companies entered the market, if you wanted a ride somewhere you had to hail a cab. While cabs are easy to find in large cities like New York, they’re practically non-existent in other parts of the country.
Ride hailing transformed how people move around a geographic area. Anyone who needed a ride could simply order one through an app on their phone for a much lower cost than hailing a cab. And anyone who wanted to make some extra cash could become a driver, offering rides to those who needed them.
Tesla’s Robotaxi network will directly compete with existing ride hailing apps. But instead of having to apply to drive on a ride hailing platform, any Tesla owner anywhere in the country will be able to simply turn ride hailing on in their Tesla app. Once full self-driving is enabled, their car will be able to drive around town providing rides for people who want them. This will establish a truly nationwide transportation network that has never existed before.
In addition to adding owner cars to the network, Tesla is also going to operate its own fleet of vehicles. This is intended to offset the imbalance of supply and demand in larger cities where the number of people looking for rides far exceeds the number of vehicles available to offer them.
Tesla plans to develop a new type of car specifically designed to operate on its Robotaxi network – the Cybercab. These two-door autonomous vehicles are designed to make it easier for people in large cities to run errands and commute.
Cybercab is being developed in tandem with the broader Robotaxi network. Last October, The Verge reported that Cybercab production could begin in 2026:
Tesla plans to launch fully autonomous driving in Texas and California next year, with the Cybercab entering production by 2026 — although he said it could be as late as 2027. Additionally, Tesla is developing the Optimus robot, which could be available for $20,000–$30,000 and is capable of performing various tasks.
During his 2024 remarks to shareholders, Musk likened the Robotaxi network to Airbnb. Just like individuals can rent out their homes using Airbnb, Tesla owners could add their cars to the Robotaxi fleet. But unlike Airbnb, Tesla would also simultaneously own a fleet of vehicles offered on the network, guaranteeing a degree of stability – something Uber has failed at spectacularly.1
The movement towards autonomous ride hailing fundamentally changes the value proposition of Tesla the company and its position in the nascent autonomous vehicle industry. Tesla would add two new revenue generating services to its platform: offering ride hailing services and collecting fees from Tesla owners who offer rides as well.
The ability to generate revenue from a Tesla and the prestige of its network could drive the cost of owning a Tesla down, expanding user adoption. And as more and more users adopt Tesla’s Robotaxi network, it would attract the capital needed to get self-driving cars on the road.
While several companies are pioneering autonomous vehicle technology, no other American car company offers what Tesla is now offering.
Tesla isn’t the first autonomous car company to offer robotaxi services. But by entering the market, it will drive faster innovation which could accelerate the broader rollout of robotaxi services across the country.
While Tesla’s Robotaxi network might seem like an ambitious project, Tesla is actually late to the game. A handful of companies have already deployed self-driving vehicles in Austin where Tesla plans to launch its Robotaxi network this summer. One notorious incident left dozens of autonomous robotaxis stranded as they found themselves in a literal traffic jam. (The operator of these robotaxis has since ceased operations).
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Waymo is the most well-known autonomous ride hailing platform which currently dominates the robotaxi market. Formerly known as Google Self-Driving Car Project, Waymo is Google’s answer to self-driving vehicles. Waymo currently offers two services: robotaxis and autonomous trucking and delivery.
Despite previously suing Uber for stealing trade secrets, Waymo launched a partnership with the ride hailing platform in 2022 to offer autonomous rides on its platform. If you are in a city that offers Waymo you can simply toggle on the option for autonomous rides in your Uber app.
Unlike Tesla, incumbent autonomous vehicle companies aren’t fully integrated. Waymo currently operates in partnership with several different companies. Google powers Waymo’s tech, Jaguar manufactures custom vehicles for Waymos fleet, and Waymo can only offer rides to the public by working with Uber.
Tesla changes this. While it isn’t the first autonomous vehicle company to enter the market it offers full integration that could accelerate innovation. It produces the vehicles that will operate on its Robotaxi network, it owns the technology being used to develop full self-driving capabilities, and it already has an app that can be deployed to offer rides.2
Tesla’s integrated network gives it a competitive advantage. Tesla can quickly diagnose and solve problems. It won’t have to coordinate meetings with representatives from Jaguar, Waymo, and Uber to resolve issues. And because Teslas are connected to Tesla AI, the company has access to infinitely more real-world data than Waymo does.
While safety issues are still a pressing issue, deploying Robotaxi sooner rather than later could help Tesla resolve safety concerns. If Robotaxi rolls out on schedule and becomes widely adopted, it will fundamentally change the state of transportation as we know it – as well as the economy.
If successful, Robotaxi could render millions of gig workers unnecessary and redundant. Without gig work as an option, millions more could become stranded within the economy.
Access to affordable transportation underpin economic growth. Rome grew into the mighty ancient power that it was due to its network of roads and the United States was able to rapidly industrialize in the 19th century due to railroads. Without the ability to get goods and services to market cheaply and affordably, economies can’t grow.3
Autonomous vehicles won’t just change whether or not you own a car, it will change the nature of transportation itself and thus the broader economy. Like other transportation innovations in the past, autonomous vehicles will drive costs down. This will make it easier to move goods and people, especially within cities.
Just as railroads led to the decline of incumbent transportation systems – notably canals – autonomous vehicles will have the same effect within today’s economy. It will lead to a decline in demand resulting in a loss of jobs. But because of the shift toward gig work in recent years, the job losses that result from autonomous driving will be amplified. Millions of existing gig workers will lose their jobs and millions more will find that gig work is no longer a viable backup plan.
Uber is known for connecting rides and drivers, but more importantly, Uber transformed the nature of work. Uber was one of the first companies to introduce gig work into the labor market and scale it. “Uberization” is a term that is commonly used to denote changes to the market. The Cambridge Dictionary defines Uberization as:
The act or process of changing the market for a service by introducing a different way of buying or using it, especially using mobile technology.
Uber symbolizes the transformation of work from a job you hold to a series of gigs you perform. Now the move towards autonomous vehicles will render millions of workers obsolete, including the more than 1.5 million gig workers who make a living offering rides on Uber and Lyft.
To understand the impact this will have in the next few years just look at the effect Uber has already had in the job market. According to Taxi Butler, as more and more riders began adopting ride hailing over the last decade, taxi ridership declined:
The taxi industry has taken a significant hit since the rise of ride-sharing apps. Taxi companies are struggling more to remain competitive and profitable. The number of taxis on the road has decreased, and often, drivers will only pick up customers who need rides to the airport or some other specific destination.
On paper, jobs in the taxi industry increased but that’s only because gig workers driving on Uber and Lyft were counted alongside traditional taxi drivers. In reality, the demand for cabs has fallen precipitously which means wages for taxi drivers have taken a hit. While there is still demand for taxis – getting to and from the airport for example – that will decline as the demographic who prefers that method of transportation dies out.
Uber disrupted the labor market in a profound way. It’s not unreasonable for Tesla to do the same. If successful, Tesla could render transportation-based gig work obsolete. If a Cybercab can give you a ride, it can deliver your takeout and groceries too.
In the short term, this affects gig workers who rely on apps like Uber for their income. Just like Uber was a cheaper, more convenient alternative to hailing a cab, Tesla could be a cheaper alternative to Uber. If Tesla’s estimates are correct, a Tesla Robotaxi would be a fraction of the cost of driving a car and taking Uber, incentivizing mass adoption.
The decline of Uber and gig work will eliminate stop-gap employment opportunities that millions of people are banking on when they lose their jobs due to the proliferation of AI in the coming years. It’s not unsurprising that this was the top comment on Tesla’s Cybercab video on YouTube:
While entrepreneurial types will purchase their own mini fleets of Teslas to make money for them once Robotaxi launches, not everyone will have the capital to do so.
The loss of gig jobs will leave millions of workers stranded in the economy. And because gig workers lack a social safety net to fall back on as demand for their services declines, the loss of this type of employment opportunity could be catastrophic for the most vulnerable members of society.
Final takeaway.
While there’s good reason to believe Tesla will dominate the burgeoning autonomous vehicle industry, there is still some time before it does so.
There are still significant safety concerns that need to be resolved. Even though Tesla plans to allow Tesla owners to add their vehicles to the Robotaxi network, it needs to get a green light from regulators first. Even once that happens, not everyone will be on board. Even if the technology is safe, it could still take some time to convince customers to trust self-driving cars.
This may add roadblocks to Tesla’s timeline but it won’t halt the wheels of progress that are already in motion. We will have autonomous cars eventually and the economy will adapt to the new transportation landscape that emerges as a result.
In the short-term, gig workers will be most affected. Teslas have lower maintenance costs and run on cleaner energy than traditional cars. And because you won’t need to sacrifice any man hours to operate a Tesla on the Robotaxi network, it’s a no brainer for Tesla to inevitably replace Uber.
White collar workers joke that they’ll just drive for Uber when AI takes their jobs but many are not joking. Workers think they’ll have gig economy apps like Uber, Lyft, and DoorDash to fall back on.
What happens when transportation-based services become fully automated and human drivers are no longer needed?
Gig workers don’t have the same protections as workers in traditional W2 jobs. Because gig workers are categorized as independent contractors, they are responsible for their own employment. If demand for Uber or other transportation-based gig services declines, there won’t be other employment options for them to fall back on.
This will affect some of the most vulnerable members of society: working parents who are seeking flexibility, students who are trying to pay their way through college, and retirees who need a little extra cash to supplement their income.
It’s been 15 years since Uber was founded and labor laws still haven’t quite caught up to the rise of gig work and the Uberization of the economy. It’s unlikely policy makers are considering how autonomous vehicles will lead to rapid disruptions in the economy that will render millions of gig workers obsolete.
While Uber still has a few years until Tesla fully rolls out its Robotaxi network, don’t bank on it being your back up plan if you suddenly find yourself out of work. Tesla could kill Uber – and the gig economy Uber built.
Tesla has capital and appeal that compounds its success. Once Robotaxi rolls out, owning the means of transportation will become more valuable than human labor. Planning for this future today could help set yourself up for success tomorrow.
Uber’s business model is built on surge pricing. During periods of high demand, Uber raises prices for riders. While this is intended to incentivize more drivers to log on to meet demand, it has created intense price volatility for riders. Because the cost fluctuates based on demand, it can be difficult for riders to plan for routine transportation costs.
Aside from the Tesla app, it’s likely Robotaxi will also launch on X.
This is one of the primary reasons why Africa is still underdeveloped. Its coastline doesn’t have natural ports and many of the continent's rivers aren’t navigable. To learn more about the economic importance of transportation check out this video:
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