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Is Tesla losing the robotaxi race?

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Good morning. AI has played a big role in the research that won the Nobel Prizes for chemistry and physics, and yesterday it was announced that frequent AI commentator Daron Acemoglu won the Nobel Prize for economics. Is this more evidence of an AI halo? Or proof that AI is the real deal? Email me: aiden.reiter@ft.com.

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Robotaxis

Last Thursday, Tesla hosted a glitzy showcase of its future offerings. Investors and the press were served drinks by Tesla’s humanoid Optimus robots, while Elon Musk gave the world its first official look at the “Cybercab” and “Robovan”: driverless, pedal-less autonomous vehicles designed for Tesla’s “robotaxi” fleet, which will allow riders to hail self-driving cars.

The market was . . . disappointed. Tesla stocks fell 8.8 per cent on Friday, and only partially recovered yesterday:

Line chart of Share price, $ showing Disappointed

The reasons for disappointment varied (and were well documented by our colleagues in Alphaville). Little detail was provided about its cheaper Model 2, which investors had hoped might lift near-term earnings. Some felt the joyrides in the new vehicles were less than thrilling. And, as it turns out, the self-functioning robots were not so self-functioning

Others were let down by the robotaxi offering itself. A lot of Tesla’s previous reports and press conferences have focused on Tesla’s full self-driving (FSD) software and the rollout of its robotaxi fleet, particularly the latter’s potential to obviate public transportation and unseat ride-sharing services such as Uber and Lyft — both of which saw their stocks surge as Tesla’s fell on Friday. As noted by our Lex colleagues, estimates for the expected value of the robotaxi market can range, but are very, very high: ARK Investments and Musk put it between $5tn and $8tn, while the more conservative RBC Capital Markets estimates it to be $1.7tn by 2040. In our piece from July, in which we tried to break down Wall Street’s earnings expectations for Tesla, we attributed $32bn of revenues to FSD software sales and robotaxis by 2029.

Tesla is not the only company trying to capture that market, though. It is up against Waymo, the autonomous driving company spun out of Google; Cruise, General Motors’ autonomous ride-hailing service; and Zoox, Amazon’s self-driving subsidiary. Is it possible that Friday’s market reaction was proof of investors feeling that Tesla may be losing the race? Some things that stuck out from Thursday’s presentation and investors’ and analysts’ reactions:

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  • Timeline: Musk initially promised a robotaxi fleet as early as 2018. During Thursday’s event he wavered: “We expect to be in production for the Cybercab, which is highly optimised for autonomous transport, in . . . well, I tend to be optimistic about timeframes, but in 2026 . . . before 2027, let me put it that way.”

    He committed to having some of the FSD capabilities for newer models available by next year in Texas and California, meaning that car owners or Tesla itself could potentially use FSD for taxi services. But it seems like Tesla’s official fleet of Cybercabs will not be up and running for a couple of years. Meanwhile, Waymo is already operating taxi fleets in four cities; one analyst told us they are “essentially ubiquitous in San Francisco”. It is also licensing its technologies to other companies and manufacturers. Cruise is operational in two cities, though it has hit some compliance and safety snares, and Zoox is testing its fleet in two states.

  • Compliance: One of the issues Cruise has run into is its proposal for a car without a steering wheel or pedals. Though the National Highway Traffic Safety Administration allows vehicles without either, Cruise paused production of its own offering after failing to get permission to scale production past 2,500 pedal-less vehicles per year. In a note to investors, TD Cowen states that Tesla’s ability to produce its own pedal-less, wheel-less Cybercabs could be “limited” given NHTSA’s previous production cap.

    The same TD Cowen note also states that Tesla’s technological approach might not meet safety standards. While Waymo and Cruise use Lidar, a remote sensing technology, Tesla prefers to use cameras and machine learning, arguing it is the superior and more cost effective technology. TD Cowen sees Tesla’s refusal to adopt Lidar as “a potential regulatory hurdle longer term” and one that will certainly raise the cost of the vehicle if the NHTSA requires Tesla to adopt Lidar.

  • Cost: On Thursday, Musk said the Cybercab would cost about $30,000, approximately the same price as its cheaper Model 3 and Model Y. But he also said that it would not have a charging port, instead using inductive charging — which Tesla does not currently have infrastructure for, raising the cost of the rollout. He also said that running the Cybercab would cost $0.20 per mile and will charge about $0.40 a mile. But the current average cost of owning and operating a vehicle in the US is $0.81 per mile, and $0.40 seems very low. Musk’s cars would have to show significant cost reductions, or Tesla may have to raise the price closer in line with existing ride hailing services.

Unhedged does not pretend to know whether Tesla will win the race for autonomous fleets. As SpaceX’s booster-catching feat showed, Musk’s companies often achieve things that were once thought to be impossible. And while it seem to us that these are pretty steep hurdles and evidence that Tesla may be falling behind, some analysts we spoke with actually saw these as strengths. For instance, Edison Yu of Deutsche Bank told us that although Tesla might need to raise the price of the Cybercab and add Lidar in the short term, its camera-based technology was a long-term edge:

Waymo has taken a very long time to scale because, though it has some AI capabilities, it has to map entire cities and code for driving cases. That is hard, as opposed to running the data through a black box model like Tesla does. This will all come down to who can scale faster. Scaling software [such as Tesla’s] is the more efficient and lucrative approach.

Tesla already has a lot of training data from its semi-autonomous driving function. Once FSD is up and running and Cybercabs are under production, it may prove to be the safer offering and quickly capture market share.

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Wall Street’s consensus estimate for Tesla’s 2029 revenue has fallen $10bn since we wrote our piece in July. Though we will not get new estimates based on Thursday’s event for a while, some investors think there will not really be an effect, as they already did not assume that Tesla would deploy its fleet in the next few years. Tom Narayan at RBC Capital Markets said, “2030 is not the bogey when we are dealing with robotaxi. It was disappointing to not get concrete numbers [on Thursday], but I don’t have Optimus or Robotaxi [generating revenue] in my forecasts for a couple of years anyway.”

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Etihad boosts flights to Jaipur

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Etihad boosts flights to Jaipur

Etihad Airways, the national carrier of the UAE, is boosting its weekly flights between Abu Dhabi and Jaipur to ten a week from 15 December, 2024

Continue reading Etihad boosts flights to Jaipur at Business Traveller.

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Founder Anne Wojcicki races to rescue 23andMe

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Founder Anne Wojcicki races to rescue 23andMe

Once-hyped genetic testing company hit by data breach, plunging share price and board resignations

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How can I make extra money now?

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7 Simple ways you can make money now 

In today’s fast-paced world, finding easy ways to make some extra cash can be a game-changer. More people are looking for ways to make extra money, at the beginning of 2024 in the UK 1 in 4 adults had a side hustle, small business or a secondary job alongside their full-time careers. In the US more than a third of adults — and nearly half of millennials and Gen Z have a second stream of income in 2024.

Whether you need to pay off bills, save for a vacation, or just have some fun money, there are numerous avenues available that anyone can tap into. Here are 7 simple ways you can make money now! 

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BBC to cut 155 roles from news operation

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The BBC has announced plans to eliminate 155 jobs from across its news operations as part of a wider £700mn cost-cutting strategy.

The move will save £24mn, according to an internal memo sent to staff at the UK national broadcaster on Tuesday and seen by the Financial Times, or 4 per cent of the budget of the newsroom.

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The BBC has increasingly struggled to cover the costs of its wide range of services, having lost close to one-third of its income over the past decade.

The previous Conservative government capped funding for the two years to 2024 and then awarded the lowest level of licence fee increase up to 2027. BBC executives will enter into talks with the Labour government about the terms of its next licence, which starts in 2027.

The corporation’s news operation will shed 185 roles in total but will open 55 new positions — a net reduction of 130 posts, or about 3 per cent of staff in the newsroom. Its media operations division is also proposing to close the equivalent of 25 posts related to the news division, with a further 25 unrelated jobs being cut.

The cost cuts form part of a wider plan set out by the BBC in May 2022 to find £500mn in annual savings, with a further £200mn of extra cuts announced subsequently. This will lead to total cuts of more than 500 roles, comprising 1,200 post closures and the addition of 700 new positions.

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The BBC said it would do “everything we can do to avoid compulsory redundancies”, including through its voluntary redundancy scheme. 

This year, the BBC announced plans to close up to 115 posts in regional editorial and production teams, or about 3 per cent of the division’s staffing. The corporation has already cut jobs in its local news teams, as well as in individual programmes such as Newsnight.

All BBC divisions have been told to reduce content creation by one-fifth. The newsroom cuts announced on Tuesday include closing the bespoke Asian Network News service, axing the HARDtalk long-form interview programme and synchronising the production of news bulletins used on Radio 5 Live and Radio 2.

Domestic radio stations will also take World Service news summaries overnight rather than producing their own.

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Stephen Sackur, presenter of HARDtalk, said on X: “This is sad news for me personally, but much more important, I think it’s depressing news for the BBC.”

The broadcaster is having to balance the rapid shift by much of its audience to digital platforms — which require different sorts of programmes and presenters — while meeting the demands of the often older users of its traditional linear channels. 

The proposals do not include cuts to the World Service, which is subject to separate discussions with the government. On Monday, BBC director-general Tim Davie warned in a speech that cuts to the World Service risked helping Russia and China spread “unchallenged propaganda”.

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Engagement with pensions rises despite only 13% receiving advice

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Consumer engagement and activity is on the rise when it comes to pensions even though only 13% have received financial advice on their pension in the last 12 months.

This is according to a report from Boring Money, ‘Pension Report 2024 – The Consumer Focus’, which showed that 75% of British adults who are not retired have at least one pension.

Additionally, 12% of UK adults have a private pension.

Despite over six in 10 finding pensions confusing, this has not stopped pension activity and engagement increasing.

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In 2022, 5% had consolidated their pension, with this figure now rising to 8%. Over two thirds (67%) have checked a pension annual statement in 2024, compared to 59% in 2022.

Also, 60% have logged into an online pension account in 2024, compared to 52% in 2022, and 6% have opened a new private pension, up from 4% in 2022.

Boring Money said: “Consideration of financial advice remains strong and events such as the upcoming Budget are likely to further increase the need for advice.”

Almost a fifth of all non-retired UK adults aged 55 and above are considering talking to a financial adviser over the next 12 months.

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The report also shows the value of advice when it comes to feeling prepared to retirement; 80% of advised non-retired pension holders aged 55+ agree with the statement, “I have a retirement plan and I’m confident about how I will fund my retirement”.

This compares to less than half of those who have not had any advice on their pension in the last five years.

Boring Money CEO Holly Mackay said: “Activity is up across the board over the last two years. People are looking at their pensions more, opening more accounts and also consolidating.

“It’s great to see increasing engagement form consumers as pensions join the mainstream, very slowly taking their place as a ‘normal person’s’ product not a ‘rich person’s’ product.

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“A side effect of this engagement is a greater retention problem for workplace pension providers, as newer ‘shinier’ retail offerings are more superficially appealing for the pre-retired cohorts, for whom the consolidation message is starting to get through.

“Although consideration of advice is higher, the impact of the Consumer Duty and increased servicing costs will likely impact the availability of advice for the mass affluent.

“As awareness and engagement grows, so will the demand for help. This growth in awareness and need is an important factor for the ongoing Advice Guidance Review to consider.”

In order to obtain these results, Boring Money surveyed 4,000 nationally representative UK adults (Sept 2024), 6,500 nationally representative UK adults (Feb 2024) and 700 Boring Money Research Panel Members (Jul 2024).

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France pushes for sway on EU car emissions rules

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France is pushing for “flexibility” on tougher car emissions rules next year that could spell billions of euros of fines for European carmakers already struggling with slowing demand for electric vehicles.

Antoine Armand, France’s newly appointed economy minister, on Tuesday said the French were sounding out European partners to see what could be done on the EU’s 2025 carbon emissions standards, which will impose limits on how much a carmakers’ fleet can emit.

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These will hit the likes of France’s Renault, Peugeot maker Stellantis and Germany’s Volkswagen with more than €10bn in penalties unless they are able to drastically increase the portion of battery-powered cars they sell, or eliminate more traditional engine ones.

“I cannot see why there would be penalties when huge efforts [in investment] have been made [by carmakers],” Armand told auto industry executives at the Paris Motor Show on Tuesday, a biennial exhibit of car designs focused more than ever on electric versions.

“You can’t have sanctions without taking into account the economic context and the development of our industry in France and in Europe,” he said. “We’re exploring what flexibility there can be in co-operation with our European partners who are the most engaged on this question.”

Armand did not detail what shape that flexibility could take — whether it meant diminishing the penalties, changing the underlying criteria involved or pushing back the deadline. He maintained that a 2035 European deadline to phase out sales of non-electric cars was necessary to get the industry to shift.

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Brussels is coming under increasing pressure from carmakers to delay or weaken its car emissions rules amid weakening demand for electric vehicles and concerns from car manufacturers that they will face millions of euros of fines for pollution.

The Italian government has also been particularly outspoken about calling for a revision of the 2035 ban with Italian Premier Giorgia Meloni dubbing it a “self-destructive policy”.

At the Paris show, Oliver Zipse, chief executive of BMW, warned that the EU ban on internal combustion vehicles from 2035 would lead to “massive shrinking of the industry as a whole”.

The German group called for an earlier review of the EU’s longer-term targets, describing them as “no longer realistic based on current market dynamics”.

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However, Stellantis chief executive Carlos Tavares on Monday cautioned against watering down carbon emissions rules, warning that delaying the shift to EVs would bring higher costs for the industry needing to invest in both conventional engines and battery-run cars.

The 2025 rules mandate that carmakers overall must cut emissions by 15 per cent compared to a 2021 baseline.

So far, the European Commission has stood by the limits as well as a ban on new internal combustion engines from 2035.

At a closed-doors event in Brussels last month, officials said that the EU should stay the course on its vehicle emission limits in order to provide certainty for investors.

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“The worst thing that we could do is to create further uncertainty and confusion by changing again the targets we have agreed,” a senior EU official said.

Transport is the only major sector in the EU where emissions are now higher than they were in 1990.

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