4 ms·

This feels like a straw man. They hammer on the costs and then hand wave around the driverless car potential. Of course Uber is driving for driverless cars and

This feels like a straw man. They hammer on the costs and then hand wave around the driverless car potential. Of course Uber is driving for driverless cars and they're applying a simple formula. If the Customer acquisition Cost (CaC) is less than the p net present value (NPV) of that customer over that customers lifetime the you should spend to acquire customers. Driverless cars will increase NPV even if the economics don't make sense today.

tyingq 10y ago
The article does skip any analysis of the model with driverless tech. I couldn't find much out there that breaks down what the cost difference would be. One article[1] suggests driverless would drop the cost from $3/mile to $1.20/mile. I'm not clear on whether that's enough to counterbalance "Uber passengers were paying only 41% of the actual cost of their trips" I suspect it would require not just driverless, but also a fairly steep hike in what they charge. Especially to overcome X (5,10,20?) years of subsidies waiting on driverless to be viable...that's a pretty big hole. [1]http://www.fuelsinstitute.org/News/AdditionalResources/2016/May2016.shtm http://www.fuelsinstitute.org/News/AdditionalResources/2016/...
- petra 10y ago
  Benedict Evans got the cost of driverless cars to something like 0.40 cents/mile if I'm not mistaken. Also another option for Uber should have been shared trips, which should have(?) network effects , but they don't seem to do very well at that , compared to the competition .
  - tyingq 10y ago
    >Benedict Evans got the cost of driverless cars to something like 0.40 cents/mile if I'm not mistaken. The article I mentioned was referring to roughly a "retail/end customer cost per mile", where Benedict Evans is probably referring to internal / wholesale costs. Either way, it's probably the same conclusion, cutting costs by roughly 50%.
  - aetherson 10y ago
    The problem with shared trips, I think, is that customers just don't want them in any great quantities. They don't want to be in very close quarters with randos. They don't want to wait while someone else gets picked up or dropped off.
    - petra 10y ago
      >> They don't want to be in very close quarters with randos. Maybe for shared rides , UBER should only assign vehicles that, allow people to sit with enough personal space,wider, for example a minivan, but make sure the middle seat is empty. That, combined with a culture of phone staring may make the experience neutral ? >> They don't want to wait while someone else gets picked up or dropped off. Most of the complaints on twitter are on the first problem you mentioned. So maybe solving it would make the service "good enough" , for the more cost-consious custuomers, and that's a big market.
- tonylemesmer 10y ago
  Its got to be flawlessly driverless and hike in rates otherwise people might just stay with normal "driver" based taxis.
heisenbit 10y ago
Ueber is using billions operating a model that does not work. This uneconomic model is heavily leveraging SV investment and vehicle owner investment. Of course one can postulate that Ueber could operate a driverless model an be successful with it. But where is any evidence for that? Running driver-less would require a totally different company structure from head to toe - from vehicle financing to vehicle serving in the field. None of that is in place and one could justifiable argue quite a few other companies are better positioned if that should come to pass.
HillRat 10y ago
That's a lot of imponderables based on unknown technologies, regulations, and economics, though. Right now Uber doesn't have to worry about fleet cap- and opex, so the assumption is that buying and maintaining an autonomous vehicle fleet will provide more relative income than their current business practices. It also assumes that Uber's current loss-leader practices will not put the company under before commercially-available autonomous vehicles are in the market, that debt service will not constitute a major issue for company profitability, and that Uber's IP portfolio and marketshare will represent a significant barrier to entry for competitors with fleet management experience (such as rental car companies and existing taxi/limo companies). That's a lot of unproven assertions to make a bet on. If driverless cars get here fast enough, the cost profiles work, and Uber has enough IP to use against challengers, then it can work. But, personally, I'd rather have a business model that actually works today than one that might potentially work in the future.

tyingq 10y ago

The article does skip any analysis of the model with driverless tech. I couldn't find much out there that breaks down what the cost difference would be. One article[1] suggests driverless would drop the cost from $3/mile to $1.20/mile. I'm not clear on whether that's enough to counterbalance "Uber passengers were paying only 41% of the actual cost of their trips" I suspect it would require not just driverless, but also a fairly steep hike in what they charge. Especially to overcome X (5,10,20?) years of subsidies waiting on driverless to be viable...that's a pretty big hole. [1]http://www.fuelsinstitute.org/News/AdditionalResources/2016/May2016.shtm http://www.fuelsinstitute.org/News/AdditionalResources/2016/...

petra 10y ago
Benedict Evans got the cost of driverless cars to something like 0.40 cents/mile if I'm not mistaken. Also another option for Uber should have been shared trips, which should have(?) network effects , but they don't seem to do very well at that , compared to the competition .
- tyingq 10y ago
  >Benedict Evans got the cost of driverless cars to something like 0.40 cents/mile if I'm not mistaken. The article I mentioned was referring to roughly a "retail/end customer cost per mile", where Benedict Evans is probably referring to internal / wholesale costs. Either way, it's probably the same conclusion, cutting costs by roughly 50%.
- aetherson 10y ago
  The problem with shared trips, I think, is that customers just don't want them in any great quantities. They don't want to be in very close quarters with randos. They don't want to wait while someone else gets picked up or dropped off.
  - petra 10y ago
    >> They don't want to be in very close quarters with randos. Maybe for shared rides , UBER should only assign vehicles that, allow people to sit with enough personal space,wider, for example a minivan, but make sure the middle seat is empty. That, combined with a culture of phone staring may make the experience neutral ? >> They don't want to wait while someone else gets picked up or dropped off. Most of the complaints on twitter are on the first problem you mentioned. So maybe solving it would make the service "good enough" , for the more cost-consious custuomers, and that's a big market.
tonylemesmer 10y ago
Its got to be flawlessly driverless and hike in rates otherwise people might just stay with normal "driver" based taxis.

heisenbit 10y ago

Ueber is using billions operating a model that does not work. This uneconomic model is heavily leveraging SV investment and vehicle owner investment. Of course one can postulate that Ueber could operate a driverless model an be successful with it. But where is any evidence for that? Running driver-less would require a totally different company structure from head to toe - from vehicle financing to vehicle serving in the field. None of that is in place and one could justifiable argue quite a few other companies are better positioned if that should come to pass.

HillRat 10y ago

That's a lot of imponderables based on unknown technologies, regulations, and economics, though. Right now Uber doesn't have to worry about fleet cap- and opex, so the assumption is that buying and maintaining an autonomous vehicle fleet will provide more relative income than their current business practices. It also assumes that Uber's current loss-leader practices will not put the company under before commercially-available autonomous vehicles are in the market, that debt service will not constitute a major issue for company profitability, and that Uber's IP portfolio and marketshare will represent a significant barrier to entry for competitors with fleet management experience (such as rental car companies and existing taxi/limo companies). That's a lot of unproven assertions to make a bet on. If driverless cars get here fast enough, the cost profiles work, and Uber has enough IP to use against challengers, then it can work. But, personally, I'd rather have a business model that actually works today than one that might potentially work in the future.