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Tesla's Cybercab and Robovan Are Impossible Without This
Overview of the We, Robot Event
On October 10th, Tesla unveiled its latest product lineup, featuring the Tesla Robotaxi Cybercab and the shuttle Robovan. Both vehicles are fully autonomous, lacking manual steering controls or pedals. Notably, neither vehicle is equipped with LiDAR and instead relies on Tesla's Full Self-Driving (FSD) software, which operates using a camera-only sensor system. Additionally, we got a glimpse of the future with Tesla's humanoid robot, Optimus, which will be available for purchase and is designed to perform household chores.
Tesla is the first major automaker to fully commit to autonomy, and for good reason—autonomy will allow Tesla to significantly increase both its gross and operating margins through software subscriptions and licensing. While traditional automakers operate within a narrow 2-3% margin, Tesla’s software capabilities have the potential to raise its operating margin to 15-20%. This financial advantage would provide Tesla with additional resources for R&D, thereby driving shareholder value beyond current expectations.
Beyond profitability, Tesla aims to tap into what may be the world's largest addressable market: human labor. With Optimus, which runs the same FSD software as the Cybercab and Robovan, Tesla seeks to automate industrial and household tasks, driving down the cost of goods and services and making them universally accessible. This vision involves the production and maintenance of billions of Optimus robots.
Business Models for Autonomy
Elon Musk has stated that anyone will be able to purchase a Cybercab or Optimus. If you want to own a car but prefer not to drive, you'll be able to order a Cybercab for under $30,000. Similarly, Optimus, your autonomous and versatile assistant at home or work, will be available for under $20,000.
Additionally, it was mentioned that individuals will be able to purchase Cybercabs in bulk and operate fleets to generate income through robotaxi services on networks like Uber. The vision is to turn the Cybercab into a value-generating asset that can be privately or commercially owned. It’s reasonable to expect that car rental companies like Hertz or Avis may want to own and operate Cybercabs. Alternatively, new fleet companies focused exclusively on autonomous transportation could emerge in different regions. Either way, the commercial use of Cybercabs is bound to materialize.
The Robovan, on the other hand, is expected to be available only for commercial purposes, with private fleets likely to own and operate them. Use cases range from school buses to corporate campus shuttles.
It’s also likely that Optimus bots will be purchased in bulk by enterprises seeking to automate specialized physical labor.
Overall, there is a strong case for both business models—personal and commercial—and we believe Tesla will successfully commercialize both.
What About Cybercab's and Robovan's Liability?
Given Tesla’s massive data advantage, with over 3 million cars on the road collecting data, it’s reasonable to assume that Full Self-Driving (FSD) technology will eventually reach human-level performance. There are even claims that it already exceeds human capabilities, though independent verification is still pending. At some point, FSD is expected to surpass the average human driver by a significant margin, potentially leading to a 10x improvement in accident rates and overall driving behavior.
From a regulatory standpoint, the U.S. does not yet have federal laws governing autonomous vehicle operations or software development. Instead, regulations are handled at the state level, with most states showing a welcoming attitude toward autonomous vehicle operators, subject to local rules. For instance, in California, companies must obtain permits from the DMV and CPUC before they can test and commercialize autonomous vehicles. Overall, the regulatory landscape in the U.S. is generally favorable for autonomous vehicles.
The key issue that remains, and the largest obstacle to the commercialization of Cybercab and Robovan, is third-party liability. Who will be responsible for injuries or damage if a Cybercab is involved in an accident? Will liability fall on Tesla, the owner, or both?
Autonomy Insurance to the Rescue
The most effective way to manage liability is through insurance, which allows the transfer of risk to a third party (an insurance company) at a reasonable cost in the form of premiums. Can Tesla use insurance to address liability for Cybercab and Robovan? The answer is both yes and no.
Starting with "yes"—any commercial applications of Cybercab, Robovan, or Optimus can be insured today. We already have a range of products such as General Liability, Robotics Errors & Omissions, and Autonomous Vehicle (AV) Liability that enable fleet owners and operators to protect themselves from third-party liability.
Now, for the "no"—this applies to personally-owned use cases. For instance, if I purchase a Cybercab for personal use, where will I get insurance? Auto liability insurance is mandatory under state law, so if you own a Cybercab, you must insure it. However, it’s uncertain whether traditional insurance companies like GEICO or Progressive will be willing or able to effectively understand and cover a self-driving car. If insurance challenges aren't resolved, liability could become the single biggest obstacle to widespread adoption.
Tesla Insurance
One potential solution for insuring personal Cybercabs is Tesla Insurance, a wholly-owned and fully integrated insurance platform at Tesla. Currently, Tesla provides insurance for human-driven vehicles in 12 U.S. states and has quickly scaled to $500 million in annual premiums. Tesla Insurance was initially conceived to encourage the adoption of Tesla vehicles by offering more affordable insurance through data-driven insights and streamlined repair processes.
Given that Tesla not only understands the performance of its Full Self-Driving (FSD) system but also controls the supply chain for necessary repairs, offering insurance coverage for Cybercabs through Tesla Insurance seems like a natural fit. In fact, it may be the most viable solution to ensure personally-owned Cybercabs can hit the road. Furthermore, bundling insurance with the purchase of a Cybercab—such as including it in a lease or financing agreement—would make the process straightforward and scalable.
RoboInsurance
As robots become a regular part of daily life, both on the roads and at home, insurance will play a crucial role in transferring liability and ensuring that all parties are protected. Koop has pioneered a suite of insurance products that already cover over 100 robotics companies across more than 20 use cases. We believe that a new category of insurance specifically for robots, "RoboInsurance," is both imminent and critically important to enable the widespread adoption of physical AI in the world.
Learn More
Koop’s assurance automation platform helps tech companies seamlessly navigate the complexities of business insurance, regulatory compliance, and security automation in one place.
We provide a comprehensive suite of insurance coverage that includes General Liability, Technology Errors & Omissions, Cyber Liability, and Management Liability coupled with the most cost-effective SOC 2 compliance certification on the market.
Ready to learn more? Visit our website at https://www.koop.ai or drop us a note at hello@koop.ai.
