The software and training data set an extremely high barrier to competition.
Once you've solved self-driving taxis, you've also solved a large chunk of self-driving commercial transportation. AI trucks could kill off rail, in addition to manned semis.
From there, it's a small leap to becoming the backbone of an ultra-efficient on-demand national distribution network.
All without the massive operating overhead of human labor... No sleep, no breaks, no weekends, no healthcare, no HR, no wages, just the price of electricity and the low/infrequent maintenance costs of electric vehicles.
Eventually. I think the taxis are 5 years away from 24/7 availability in NYC, maybe 3 for San Francisco, and the grand vision is probably 10 years out.
But... Yeah... This is going to be huge.
>The software and training data set an extremely high barrier to competition.
How many technological barriers to entry have survived very long?
The industry may be huge, but it's not clear that only one company will crack self-driving. I think it's far more likely every major autocompany will develop good enough versions of self driving.
Plus, these companies won't be able to hide their software behind algorithms. Someone is going to reverse engineer anything put into the open market.
> I think the taxis are 5 years away from 24/7 availability in NYC, maybe 3 for San Francisco
lol
That's another amusing point of view I see here a lot. The use case of taxis in a major city is by far the most challenging use case for autonomous driving. Mark your calendars for 5-10 years after you first see an actual autonomous vehicle having any type of real world application at all. Which you haven't.
The whole idea that taxis are the vanguard of autonomous driving is obvious patent nonsense, why it persists remains a mystery to me.
> Mark your calendars for 5-10 years after you first see an actual autonomous vehicle having any type of real world application at all. Which you haven't.
What's your criteria here?
Because I have the same opinion as you... Except I've literally seen experimental autonomous cars driving on the street... Hence +3 years for SV, and +5 for NYC.
Taxis are not the vanguard, they're just the most visible. Autonomous trucking is underway and will likely see mass adoption before taxis.
The revolution is close - we're seeing disruption everywhere. I could empathize if this was an isolated Google vaporware experiment... but every class of vehicle has promising automation, researched by dozens of companies around the world, and implementing multiple approaches.
Most will fail, of course, but we are on the cusp of success.
This isn't a binary problem: "solved" versus "not solved". There are many parts of a solution at various states of development. Research can be replicated and reverse-engineered.
It's also unclear that why there would be one vertical-integrated company in an industry built on outsourcing. There's a lot of room for collaboration at building different parts of a car. And why wouldn't a company that builds a self-driving taxi sell it to multiple operators?
> There's so much magical thinking around self-driving cars. You guys are aware that the only difference between a self driving car and not is the person driving right?
It's also decoupling some people's fundamental need to get around via car from the need to own/rent/park/maintain that car, at a cost much lower than taxis or ride sharing. We have parking lots dedicated to idle cars that people have bought because they find it more economical than taxis or ride sharing. On demand, point to point transportation at a low cost could obviate the need for car ownership and parking lots for most of us.
In addition to all the profitability arguments (and I largely agree with CPLX here), we're talking about a market into which VCs have literally dumped billions recently, with little sign of abating, so any company with sustainable pricing will have to compete against companies with venture subsidized pricing.
> Why on earth would autonomous taxis be a monopoly?
I'll bite. First, there's the entry point. If it's a taxi, you as the rider don't own it, which means you have to summon it. The most ubiquitous company here has a significant advantage, because they own the app or phone number that you have on your phone. You won't have to learn a new trick every time you go to a new city. It's similar to Google's monopoly on search.
Being driven around is also somewhat of a commodity. People don't have strong preferences that can't all be satisfied by a single company. You want a nice car or a cheap one? A solo ride or a group one? Easy enough to do in a single app. Whereas an industry resistant to monopolies — say restaurants or productivity apps — are subject to a variety preferences and whims.
There are also economies of scale. Major players like Uber and Lyft have the marketing budget to drive far more growth than competitors. They have the budget to invest in the latest technologies. They have the budget to outright copy or buy competitors, like you see Facebook doing. They have the budget to form partnerships and integrations with other big and powerful companies.
Network effects can play into this as well. Pretty much everyone has Uber and Lyft, which enables things like ride-sharing (Uber Pool and Lyft Line), or splitting the cost of rides with friends, etc.
This is all just off the top of my head. I'm sure others who are better versed in business than I am can think of more reasons for why autonomous taxis are well-suited to monopoly, and counter-arguments as well. But it's certainly not a ridiculous presumption.
Literally every single one of the dynamics you mention is already true for taxis driven by people.
Autonomous taxis are taxis, which we understand, with computers replacing the people. That's all they are.
Magical thinking abounds.
Not true at all. I can't hail a cab with ease from 90% of the places I might want to call an Uber. They also can't be counted on to deliver a quality experience. Therefore, people are switching to the new technology of rideshare apps. Where the incumbents have a huge advantage because using them if you have already is seamless. Self-driving is just the next step in the chain.
I agree with you to be cautious not to assume either of these with certainty, but just to play devil's advocate:
Assuming that self-driving car tech gets to the point where it's viable as a business, why _wouldn't_ you assume that it'd be huge? Trucking alone is a massive ~$700 billion/year industry in the US (https://www.selectusa.gov/logistics-and-transportation-industry-united-states https://www.selectusa.gov/logistics-and-transportation-indus...). Even if you gain only a few % points of that for autonomous vehicles you're sitting on top of billions in revenue. The auto industry adds another ~$600 billion/yr on top of that. Sounds pretty big to me, and there's lots of room to grow from there.
Now, as for monopolies in the market, I don't buy it quite as easily, but I can see it due to the usual "rich get richer" effect. Not to mention training data -- any self-driving company that starts to serve more rides will be accumulating more training data, allowing them to improve their product more and making it that much more difficult for second-in-lines. Look at Wal-Mart, where competition requires big infrastructure, they're bigger in market cap than their closest 5-10 competitors put together.
Switching costs for consumers is low. There is really no difference where I live between Uber and Lyft, and I could see another two or three competitors doing the exact same thing.
Another industry that has low switching costs for transportation are the airlines. They had to implement rewards programs to keep customers loyal, and that still hasn't stopped the race to the bottom in terms of price.
Think this will be a winner take all. So would agree on a monopoly and Google is well positioned.
Taxis are a typical market of critical mass. The bigger a company gets, the better its product inherently gets. This tends to be something that leads to monopolization. Taxi transportation was (and is) already a monopoly in many areas. And in that case they're mostly obtaining their monopoly just based on the critical mass aspect since the real benefits of an economy of scale is reduced when you have a human in the car as the price floor far higher than just the maintenance cost of the car.
And that floor is also regionally dependent. With self driving taxis there no technical reason that taxis in San Francisco couldn't cost the same as taxis in places with reasonable living expenses, at least so long as things like basic maintenance could also be reasonably automated to similarly remove humans from the picture.
And finally it will be incredibly difficult to convince consumers to swap to another brand. One taxi is, more or less, the same as another. When one works well, has an overwhelming critical mass, and offers fair prices - where is a new company supposed to compete? Also there will be minimal need to pick and choose markets, at least not in the scale you're implying. I think most of these imminent monopoly factors are going to be self evident to investors. That's going to drive absurd investment enabling companies to deploy in mass. The bottle neck will likely be how fast cars can be produced which is likely why we're seeing riding sharing come autonomous taxi companies currently partnering with vehicle manufacturers. And I've yet to touch on the final issue (though I'm sure I'm neglecting others) and that can be stated simply as what it is - mergers and acquisitions.
> And finally it will be incredibly difficult to convince consumers to swap to another brand. One taxi is, more or less, the same as another.
That's not how any of this works.
What you're saying is the opposite of obvious economic theory. It's a pretty fundamental concept that when products are commoditized people will switch to save fractions of a cent or because they're bored, or because the logo is a different color.
The only counter to this is if there are strong netowrk effects but taxis only have weak network effects for availability only.
Right, people will be driven primarily by cost. And the larger an automated taxi service is, the cheaper than offer their product - which prices that not only approach but go below the price of private ownership. And the largest players will be able to setup extensive maintenance/cleaning and other facilities ensuring that what difference does exist in quality of rides is also in their favor. This is something that companies without the same scale will be unable to compete against. And you cannot marginalize the issue of availability and response time. In a world of ubiquitous taxis, it's reasonable to expect that the average response time could begin to approach measurement in seconds. Once again that's exclusively a product of scale.