My understanding is that in a reasonably stable state, an autonomous car would run on battery, charge itself and cost 40k. If a car has a life time of 5 years and electricity costs 4k/yr + 2k maintenance (lower for electric cars), we are looking at operational cost of 14k/yr per vehicle.
Right now an Uber driver who is probably online 60 hours a week, needs to support a car priced around 25k (amortized over 5 years), gas (which is more expensive than electricity), maintenance and 50k-70k/yr driver income. Assuming lower end we are looking at 5k car + 10k fuel + 5k maintenance + 50k driver income. So cost to support a driving car is 70k/yr for lower hours of operation.
So we are looking at a 5x cost and lesser hours of operation with human driving vs autonomous driving.
These are off the napkin numbers so please don't take them literally. It is meant to highlight that driver income is the biggest factor.
Whoever has self driving tech, they can start undercutting Uber with the most profitable markets (NYC, SF, Boston, LA etc) and expand from there.
I feel that we are at least 5-8 years away from main stream self driving. But I could be wrong.
Let me take a stab at it as well, because I think it could be simpler.
Let's assume the driver drives the exact same model as the autonomous one, except he saves $10k upfront on the sensors. So his costs are 12k/year. A decent alternate job would pay $10/hour, and a person could probably work 9 hours a day * 6 days a week * 50 weeks, which comes to $27k. So for the taxi driving gig to be worthwhile, the driver needs to make somewhere in the region of $35-40k ($27k + $12k).
As mentioned earlier, the costs of the self-driving car is $14k/year. So that's a difference of 2.5x-3x. Still significant enough that the a taxi company that offers rides at 30-40% of the cost of its competitors will just win.
I have gone through a few different versions of these calculations and got similar results. Even if the driverless tech costs more it is still around half the costs of a human driven car.
On factor I have not seen fully addressed is the ability of driverless cars to run near 24/7. Given than demand is variable and human drivers could share cars like taxis what is the worth in practice?
I think having access to rides at all hours is helpful. You might not take many rides at 2am, but when you do, its something pretty important. Having a safe option that's available at any time of day or night will make self-driving equal to or better than actually owning a car and far superior to conventional taxi rides.
> Wouldn’t Running your own cars would mean incredible capital costs and marketing costs to get people to switch from uber?
> Additionally you need people maintaining them.
This is why I think Tesla is a bigger threat to Uber in long term. If you are not sure then refer to Tesla's plan 2 but Uber also have a counter plan - UberAir
> Do not need to deal other non autonomous devices while in flight.
In a decent-sized city, there will be low-flying helicopters for police, fire and medical emergencies. Admittedly, this is much less common than for autonomous cars, but any slight problem could easily become catastrophic (no such thing as a fender bender in mid-air).
> Do not need to follow existing road traffic rules.
But do need to follow existing air traffic rules. New regulation would also certainly be drafted (one would hope anyway).
> Lot of paths available.
Maybe, again depends on regulation. Commercial airplanes do have certain "lanes" they are supposed to stay in, and are not allowed over certain areas.
Whoever solved self-driving cars could buy 10,000 cars per city. Let's say each car costs $100,000. That's $1B if paid upfront which is never the case, but let's assume.
Now, each of those 10,000 cars could work 24x7. Assuming each ride is $10, and you can do 50 rides in a day (2 trips per hour on average over the entire day), that's $500 per day less electricity and maintenance. That's $5M/day with no employee costs except for maintenance workers. You could scale up by simply buying more cars, and whichever cars aren't needed could roost at homebase, without people picketing or sending nasty tweets saying they don't have enough work.
I doubt you have to pay for marketing costs at this point, word of mouth would be strong enough, and you just develop an app.
While I'm bullish that self-driving will happen in our lifetimes, I think there are a lot of challenges that many are underestimating. This includes the actual technology—this is one of the most important and challenging technological breakthroughs of all time. It's going to take time and be very, very expensive to produce at scale (ie all-electric self-driving cars at $100K a piece).
Even putting that aside, I have questions about the business side of things. Demand for transportation has been pretty consistent with big lumps during the morning and evening commutes.
One of the beauties of Uber's existing business model is that it can theoretically spin up and down drivers as needed with Surge pricing. With a fleet of cars, it's not guaranteed that supply will perfectly match demand most of the time.
The counter to that, which I sort of buy, is that it will kind of be like broadband Internet. We don't even know what demand and opportunities self-driving cars will create. My hesitancy with fully embracing this is that broadband was an acceleration of something new whereas self-driving is a leap to an existing quantity of transportation. It will still change lots of things but it will take longer for things like where you choose to live to change.
Finally, my main hesitancy is the human aspect. For self-driving to make the impact that many want/believe, there's going to have to be a hard line in the regulatory sand where human-controlled cars are outlawed or limited. I don't see that happening in the United States for a long, long time.
Great points. The other thing I might add, which your points support, is that the longer the roll-out of self-driving cars takes, the less likely it is to be disruptive to TNCs.
I agree. The user behavior has already been developed. And Uber doesn't have any special user loyalty. There is no reason for users to not try another app.
If the tech is indeed safer vs human, it would also have an added benefit of not having safety risks similar to Uber where some Uber drivers have assaulted their riders.
Marketing would be negligible because Uber has already created that market: "that other app where there is no driver begging for tips like on Uber" would not need much help selling itself (assuming uber would be phasing out drivers incrementally, while a robotic competitor would start 100% driverless).
As for capital costs: I would expect competitors to have a much easier time raising capital for their fleet than Uber, where all new investors have to to share their stake with several billions (!) of pre-selfdriving investment. Not every competitor will be drowned in investment, (there is an infinite number of ways to share off investors) but one or two will be enough to cause serious trouble for uber.
Right now an Uber driver who is probably online 60 hours a week, needs to support a car priced around 25k (amortized over 5 years), gas (which is more expensive than electricity), maintenance and 50k-70k/yr driver income. Assuming lower end we are looking at 5k car + 10k fuel + 5k maintenance + 50k driver income. So cost to support a driving car is 70k/yr for lower hours of operation.
So we are looking at a 5x cost and lesser hours of operation with human driving vs autonomous driving.
These are off the napkin numbers so please don't take them literally. It is meant to highlight that driver income is the biggest factor.
Whoever has self driving tech, they can start undercutting Uber with the most profitable markets (NYC, SF, Boston, LA etc) and expand from there.
I feel that we are at least 5-8 years away from main stream self driving. But I could be wrong.