It's a good problem to have, to have demand soaring, as FSD improves and with high gasoline prices, forcing them to add shifts at their car plants to meet the demand.

Demand isn't really soaring though. Tesla is on track to deliver about 1.8-1.9 million vehicles this year. That's about the same as the last three years. But while Tesla's sales are pretty flat, global EV sales are growing by double digits. That's not good. In the meantime, Tesla's margins, which were once the darling of the industry, are now about the same as typical car company as they trade margins for sales. While not tragic, it simply means they are slogging it out with everybody else.

Uber costs about twice as much per kilometer as an unmanned robotaxi, even when you include cleaning and maintenance. How will Uber compete? It currently makes about twice the earnings of Tesla, and most of that volume should go to the low-cost competitor, at better margins.

It is hard to see how robotaxis are lagging Waymo technically - both are very safe, using different technologies, but it is Tesla that can do it at something like half the cost, so if it works, and it looks like it is working, this will have been the correct technical orientation. Tesla can ramp its volume as high as it wants to, although they are probably waiting for v.15 of FSD to really go vertical. Have a look at robotaxitracker.com to see how quickly the rollout is going already.

Tesla robotaxis still can't travel on the freeway or navigate rail road crossings. Musk recently tweeted that robotaxis have trouble identifying dark animals at night, hence the limited night time service hours (Waymo runs 24/7).

But permitting is also key. Some jurisdictions like Texas and Florida are straight foreword, others are not. Obtaining ride hailing permits in general will require slogging through the bureaucratic process jurisdiction by jurisdiction, down the municipal level in most cases. Airports and similar destinations have their own rules that have to be navigated separately. It took Uber and Lyft years to get ride hailing permits nationally and they still operate with restrictions in many cases. AV ride hailing adds a level of complexity on top of that. On top of that, the service areas need to be mapped, the fleet depots and parking areas need to be obtained, and so on. All of these are solvable problems but they all take time and money.

I'm certain Tesla's costs are not less than Waymo's and likely won't be less for a long time. Tesla spent billions in capex and R&D on the Cybercab. After eight months of production they've only built a few hundred and only about a hundred of those have ever been operational. They'll need to deploy many thousands before their per unit costs begin to approach Waymo's. Even then, manufacturing is a low margin business. Apple could build the iPhone themselves, for example. They just don't want to.