3 ms·

You raise an important point. I imagine selling the cars externalizes the cost of financing the car and risks associated with the service.

by bmh_ca 10y ago

dragonwriter 10y ago
> I imagine selling the cars externalizes the cost of financing the car and risks associated with the service. Sure, and that makes sense in most realistic cases. A $35,000 car that returns an expected $30,000/year isn't a realistic case. Anywhere remotely close to that, and the case for selling the cars to consumers to realize (reduced) returns more quickly and insulate the manufacturer from risk just isn't there. Heck, even if the company decides they don't want to be in the business of owning the fleet, the fact that it is expected to return $30K a year means that the price that can be supported will be much higher (or, conversely, the fact that the car can be sold for $35K will drive down the returns as more people buy the car, and supply drives down market clearing price for all the productive uses.)
dogma1138 10y ago
Not really they can externalize the risks on their own. But if they own the cars they can save a metric ton of money. You would be surprised just how much of the cost of a mid range car is in the interior not only because they need to outsource those materials and gadgets usually but because the interior is one of the few things that is still done mostly manually. An autonomous car that drives people around doesn't need an infotainment system, doesn't need fancy driver and side passenger seats doesn't need tons of stuff. Heck you would be able to take out the driver/passenger side completely out of the picture if you are designing a dedicated autonomous taxi. Add to that all the other crap that every car now has to have to be competitive and it adds up to a metric ton of saving. Ford/GM/Whoever can design the cheapest simplest shittiest car they can think off that no one would ever want to buy because it doesn't have 5 different suspension settings and xband radio that sync with your phone to get you your latest podcasts and a climate controlled cup holder that keeps you drink cool in the summer and warm in the winter, seat warmers padded pedals and that turbo charger because when buying a 30K it's 0-60 is still important for no apparent reason. They can cut the cost of making the car by probably 50% easily if they don't have to built it to compete in the market, no one cares about 0-60 or xband when they take a 15min uber ride. And not only would you save money on the manufacturing you would save tons of money by being able to recycle the cars afterwards, you can get a very large part of the cost of the BOM of a car by recycling it and since car manufacturers basically say bye bye to the car once they ship it to the dealer they never see a penny out of it. The next big saving/cost reduction is not having to deal with customers a very large portion of the cost of a car is the infrastructure and network a car manufacturer has to set up to support the car. They have to provide service for the first 3 years 100,000 miles - that's gone, they have to setup a network of authorized dealers and provide support and training - that's gone, they have to setup a network of authorized repair and service providers - that's gone. They have to track every car and know where and when it was sold and where it is if they need to do a product recall - that's gone or well every easy since they run all the cars. They have to support the car by law by providing replacement parts sometimes for decades depending on the country which means they either build considerably more parts than they need or have to continue to have the ability to construct them for years which is expensive as duck - this is also gone. Heck the advertisement costs alone is probably couple of 100's of millions a year globally if not N/A only, take that out too because now you don't need to tell people what's in your new Fjord Mikata M30 because you aren't selling direct to customers anymore. If you can reduce the cost of the car by 50%, and get 60-80% of the cost of the BOM back by recycling it after 3-5 years it's a no brainer to cut the middle man and stop selling cars to people period. When take out all of that the financing becomes a non-issue the cars are assets not only that they have value but they also generate income even if Ford/GM needs financing they won't have issues getting it for the same reason that for individuals it's easier to get financing for a work vehicle than for a leisure car.

You raise an important point. I imagine selling the cars externalizes the cost of financing the car and risks associated with the service.

by bmh_ca 10y ago

You raise an important point. I imagine selling the cars externalizes the cost of financing the car and risks associated with the service.

dragonwriter 10y ago

> I imagine selling the cars externalizes the cost of financing the car and risks associated with the service. Sure, and that makes sense in most realistic cases. A $35,000 car that returns an expected $30,000/year isn't a realistic case. Anywhere remotely close to that, and the case for selling the cars to consumers to realize (reduced) returns more quickly and insulate the manufacturer from risk just isn't there. Heck, even if the company decides they don't want to be in the business of owning the fleet, the fact that it is expected to return $30K a year means that the price that can be supported will be much higher (or, conversely, the fact that the car can be sold for $35K will drive down the returns as more people buy the car, and supply drives down market clearing price for all the productive uses.)

dogma1138 10y ago

Not really they can externalize the risks on their own. But if they own the cars they can save a metric ton of money. You would be surprised just how much of the cost of a mid range car is in the interior not only because they need to outsource those materials and gadgets usually but because the interior is one of the few things that is still done mostly manually. An autonomous car that drives people around doesn't need an infotainment system, doesn't need fancy driver and side passenger seats doesn't need tons of stuff. Heck you would be able to take out the driver/passenger side completely out of the picture if you are designing a dedicated autonomous taxi. Add to that all the other crap that every car now has to have to be competitive and it adds up to a metric ton of saving. Ford/GM/Whoever can design the cheapest simplest shittiest car they can think off that no one would ever want to buy because it doesn't have 5 different suspension settings and xband radio that sync with your phone to get you your latest podcasts and a climate controlled cup holder that keeps you drink cool in the summer and warm in the winter, seat warmers padded pedals and that turbo charger because when buying a 30K it's 0-60 is still important for no apparent reason. They can cut the cost of making the car by probably 50% easily if they don't have to built it to compete in the market, no one cares about 0-60 or xband when they take a 15min uber ride. And not only would you save money on the manufacturing you would save tons of money by being able to recycle the cars afterwards, you can get a very large part of the cost of the BOM of a car by recycling it and since car manufacturers basically say bye bye to the car once they ship it to the dealer they never see a penny out of it. The next big saving/cost reduction is not having to deal with customers a very large portion of the cost of a car is the infrastructure and network a car manufacturer has to set up to support the car. They have to provide service for the first 3 years 100,000 miles - that's gone, they have to setup a network of authorized dealers and provide support and training - that's gone, they have to setup a network of authorized repair and service providers - that's gone. They have to track every car and know where and when it was sold and where it is if they need to do a product recall - that's gone or well every easy since they run all the cars. They have to support the car by law by providing replacement parts sometimes for decades depending on the country which means they either build considerably more parts than they need or have to continue to have the ability to construct them for years which is expensive as duck - this is also gone. Heck the advertisement costs alone is probably couple of 100's of millions a year globally if not N/A only, take that out too because now you don't need to tell people what's in your new Fjord Mikata M30 because you aren't selling direct to customers anymore. If you can reduce the cost of the car by 50%, and get 60-80% of the cost of the BOM back by recycling it after 3-5 years it's a no brainer to cut the middle man and stop selling cars to people period. When take out all of that the financing becomes a non-issue the cars are assets not only that they have value but they also generate income even if Ford/GM needs financing they won't have issues getting it for the same reason that for individuals it's easier to get financing for a work vehicle than for a leisure car.