What’s Whitney Tilson’s “TaaS?” He says “It could put up to an extra $5,600 back in your pocket each year”

Checking out the TaaS teaser pitch from Empire Stock Investor

By Travis Johnson, Stock Gumshoe, April 16, 2020

The newest ad for Whitney Tilson’s Empire Stock Investor ($49, renews at $199) is all about this “Taas” business, and I’ve gotten a few questions since it started circulating a week or two ago… so let’s dig in!

The basic idea is that “TaaS,” which is “Transportation as a Service,” is going to take off and be the next great defining economic trend… which will save lives and money and, if you buy the right stocks, make you rich.

That’s based on two different trends that Whitney Tilson talks up in the ad — electric vehicles, and autonomous driving.

Here’s how he argues that electric vehicles will become mainstream much more rapidly than you’re guessing…

“If you have the choice to get essentially the same car, but one is cheaper to buy, costs 90% less to maintain and use on a daily basis, and lasts up to five-times longer… which car will you buy?

“In just a few years, no one in his right mind is going to buy a new gas-powered vehicle.

“What so many people are missing right now is that this shift to EVs isn’t about the environment or ‘going green.’

“Again, it’s all about economics….

“Mark my words: In five years, electric vehicles will account for more than half and perhaps much more of all new cars sold in the United States.”

But that’s just half of the promised revolution that Tilson sees coming…

“When you pair EVs with another disruptive technology — self-driving vehicles, controlled by very powerful computers — it will be completely transformative.

“Sooner than most people think, you’ll be able to hail an electric, self-driving vehicle via an app on your phone, just like you hail Lyft and Uber ride today.

“And this is TaaS… which stands for: ‘Transportation as a Service’ ….

“Estimates are that TaaS will reduce the total costs of transportation by 10-times, compared to owning your own vehicle.

“TaaS could soon drive down our costs of transportation to just 10 cents or even less per mile!

“Today, it costs about 80 cents per mile in our gas-powered cars, according to AAA.

“Think about that…

“I could soon walk out of my Manhattan home and comfortably ride to the Nation’s capital, in a TaaS vehicle, for less than $25—or even less if I’m willing to share the car!”

And that’s where that “put $5,600 back in your pocket” talk comes from…

“… instead of paying $50,000 for a new car… plus $3,000 a year to fill up your tank… and $1,000 to $4,000 a year for insurance, you’ll instead spend something like $150 a month for unlimited rides with a TaaS subscription.”

That will lead to far fewer car crashes, since we won’t be dealing with human error or road rage anymore… though I guess we have to keep the “law of unintended consequences” in mind when trying to imagine what a few computer glitches could do to the New Jersey Turnpike on a rainy Friday evening.

And Tilson goes on to say that 2020 is the year of “peak car ownership,” with the danger and waste of individual car ownership gradually becoming a thing of the past from here….

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“With TaaS, there will be a HUGE reduction in the number of cars on the road… some say the number of cars we’ll need will drop by 80%.

“Many auto makers will go out of business as a result.

“Over the next few years, you do NOT want to own traditional, indebted car companies like GM.

“You also do NOT want to own most publicly traded car dealerships… or car lenders like Santander and Consumer USA. Nor do you want to own companies that sell personal car insurance like Progressive or Allstate. Or focus on repairing or servicing them, like AutoZone, Midas, or Precision Auto Care.”

A few readers made that point earlier this week when I was talking about an AutoZone teaser, by the way — from a different Stansberry teaser, by the way, so at least we know those editors all have independent ideas, they’re not all singing the same song. And since he mentioned auto insurers but left out GEICO, owned by Berkshire Hathaway, which is the stock Whitney Tilson likes above all others and calls his “#1 Retirement Stock,” I should note that Tilson did try to ask about GEICO and autonomous cars at the last Berkshire meeting, for what it’s worth, but didn’t get his chance last year.

And in case you want to daydream about the other longer-term impacts, here’s more from the ad…

“Imagine a world in which nearly all of the parking lots located on prime land can be converted into new offices, housing, businesses, parks and playgrounds, and other useful spaces.

“It’s mind-blowing…

“Did you know, for example, that approximately 1/3rd of the land some cities is occupied by parking lots?

“According to one estimate, all of the parking space in Los Angeles alone is equal to three cities the size of San Francisco….

“This is going to have the biggest impact of all on one huge industry: Oil.

“The entire industry, starting with the high-cost producers, like Canada’s oil sands, is going to get crushed.

“Oil won’t go away entirely of course, but demand will fall significantly. The long-term price of oil could get cut in half to around $25 a barrel.”

I could be snarky and say that we’re past that already, with oil recently dropping below $20 a barrel… but that’s for May 2020 delivery, when you’re talking about long-term futures the prices are still substantially higher, oil for June 2022 delivery will still cost you about $38 a barrel right now, and if you go out seven or eight years (where futures aren’t really traded much) the futures quotes are for roughly $50 a barrel, so $25 could theoretically be a “cut in half” price.

That’s just a little taste of the massive disruption that this could cause, of course, he goes into stuff like real estate values, and city, state or town budgets that are dependent on parking fees, tickets or gas taxes. And he says it’s coming soon…

“People always overestimate how long a revolutionary breakthrough like this will take to reach massive scale, and that’s the big mistake many are making today too….

“Back in 1985, for example, AT&T hired McKinsey, the world’s leading consulting firm, to predict the adoption rate of cellphones.

“McKinsey’s ‘experts’ predicted the cell phone market would total 900,000 customers by the year 2000.

“But they were off by more than 100-fold… the actual number turned out to be 109 million!

“You see this again and again… every time a truly disruptive innovation enters the marketplace—nearly everyone underestimates how quickly it will catch on and disrupt the status quo.”

And then he starts to get into the individual stocks he thinks you should buy because of this trend…

“If you want to see one simple stat that sums up how quickly this technology is improving… and how fast it’s moving