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Driverless cars are unlikely to increase their profitability anytime soon (if ever). I dug into the math on this in some depth here: https://news.ycombinator.c

Driverless cars are unlikely to increase their profitability anytime soon (if ever). I dug into the math on this in some depth here: https://news.ycombinator.com/item?id=15744074 https://news.ycombinator.com/item?id=15744074 The TL;DR is that there is not enough spare profit currently going to drivers to cover the cost of buying driverless cars.

SilasX 9y ago
Even worse, that seems to be an optimistic estimate -- I don't think it's accounting for how Uber's ability to charge monopoly prices for self-driving car service will be temporary. Other services (from Google, Chevy, etc) will come on line and drive down the extra profits from not having to pay for drivers.
- bob_theslob646 9y ago
  The only difference between Uber and the other companies is that Uber's main business is markeplace transportation whereas the others don't necessarily specialize in it. I'm not saying that they cannot compete but initially it's not going to be easy, like flipping a switch as so many make it out to be.
kjksf 9y ago
This analysis is the case of trees obscuring the forest. There is no human driven taxi business in the world where robo taxis exist. By my calculations robo taxis are 2x-4x cheaper than human driven taxis. If Uber doesn't do robo taxis then it dies the moment someone else does.
- gaius 9y ago
  y my calculations robo taxis are 2x-4x cheaper than human driven taxis Care to share these calculations?
bob_theslob646 9y ago
Well that all depends on what you classify as profitable? Also whoever wrote that piece has never taken a class in accounting. There's something known as useful life of an asset.( You can write off a lot of expenses and do other clever accounting tricks that I'll never post on a public forum) They also bought one of the safest vehicles. Wait until they ( insurance companies) start charging higher rates of insurance for having a less safe vehicle AKA not newer model. They also bought the same vehicle so they can actually use scale for buying parts and services to maintain it. They also just bought a mapping fleet because wherever it goes it will take images similar to Google Street View. Uber could build its own map service. All of this reduces costs on the back end. In terms of operating costs, they can buy fuel at scale and possibly hedge which makes it incredibly cheap, talking about 20-40% cheaper than anyone else. There also was nothing mentioned about prices increasing. The fact of the matter is that prices will increase. If that's the case they can easily make that money back over 5 years. These are some thing that was not mentioned in the calculations you referenced.
- femto113 9y ago
  You don't need any more specific definition of "profit" in this case than "which approach is likely to make the company more money than the other". By going driverless Uber takes on some new expenses (buying/maintaining/operating the car) and eliminates others (mainly what it now pays out to drivers). My sense is that they will struggle to break even much less come out substantially ahead, but feel free to present your numbers showing how that's wrong.
dylan-m 9y ago
Yeah, I'm having a hard time seeing how a company that doesn't own cars (to the point they insist they are "a software company"), pays thousands of drivers, and whose users don't need driver's licenses; is going to magically turn into a company that owns a fleet of state of the art cars (and parking spots and other land), doesn't pay drivers, and whose users will probably need driver's licenses. These are polar opposite businesses. You don't do that while you're hemorrhaging money and while it's uncertain you can even do that other business in 98% of the world.

SilasX 9y ago

Even worse, that seems to be an optimistic estimate -- I don't think it's accounting for how Uber's ability to charge monopoly prices for self-driving car service will be temporary. Other services (from Google, Chevy, etc) will come on line and drive down the extra profits from not having to pay for drivers.

bob_theslob646 9y ago
The only difference between Uber and the other companies is that Uber's main business is markeplace transportation whereas the others don't necessarily specialize in it. I'm not saying that they cannot compete but initially it's not going to be easy, like flipping a switch as so many make it out to be.

kjksf 9y ago

This analysis is the case of trees obscuring the forest. There is no human driven taxi business in the world where robo taxis exist. By my calculations robo taxis are 2x-4x cheaper than human driven taxis. If Uber doesn't do robo taxis then it dies the moment someone else does.

gaius 9y ago
y my calculations robo taxis are 2x-4x cheaper than human driven taxis Care to share these calculations?

bob_theslob646 9y ago

Well that all depends on what you classify as profitable? Also whoever wrote that piece has never taken a class in accounting. There's something known as useful life of an asset.( You can write off a lot of expenses and do other clever accounting tricks that I'll never post on a public forum) They also bought one of the safest vehicles. Wait until they ( insurance companies) start charging higher rates of insurance for having a less safe vehicle AKA not newer model. They also bought the same vehicle so they can actually use scale for buying parts and services to maintain it. They also just bought a mapping fleet because wherever it goes it will take images similar to Google Street View. Uber could build its own map service. All of this reduces costs on the back end. In terms of operating costs, they can buy fuel at scale and possibly hedge which makes it incredibly cheap, talking about 20-40% cheaper than anyone else. There also was nothing mentioned about prices increasing. The fact of the matter is that prices will increase. If that's the case they can easily make that money back over 5 years. These are some thing that was not mentioned in the calculations you referenced.

femto113 9y ago
You don't need any more specific definition of "profit" in this case than "which approach is likely to make the company more money than the other". By going driverless Uber takes on some new expenses (buying/maintaining/operating the car) and eliminates others (mainly what it now pays out to drivers). My sense is that they will struggle to break even much less come out substantially ahead, but feel free to present your numbers showing how that's wrong.

dylan-m 9y ago

Yeah, I'm having a hard time seeing how a company that doesn't own cars (to the point they insist they are "a software company"), pays thousands of drivers, and whose users don't need driver's licenses; is going to magically turn into a company that owns a fleet of state of the art cars (and parking spots and other land), doesn't pay drivers, and whose users will probably need driver's licenses. These are polar opposite businesses. You don't do that while you're hemorrhaging money and while it's uncertain you can even do that other business in 98% of the world.