4 ms·

> Paying by the drink (ie paying the $0.60-0.80 + margin that it costs to operate a car) will never be a good deal for the consumer. The economics of this are

> Paying by the drink (ie paying the $0.60-0.80 + margin that it costs to operate a car) will never be a good deal for the consumer. The economics of this are the opposite. Having cars sit unused in driveways and parking spots, and be maintained by non-experts, is highly inefficient. Just like cloud infrastructure, it is more efficient to centralize and rent out capacity as needed.

ghaff 9y ago
One difference from centralized computing is that a lot of the costs associated with cars are distance-based rather than time-based. If I only drive a car a few thousand miles a year and have it sitting in my driveway/garage in a suburb/the country, it doesn't cost me a lot. That said, a lot of people (such as people who lose money driving for Uber) don't really properly account for their per-mile costs. I expect a lot of people would think twice about their driving habits if they had to feed a meter at 50 cents per mile every time they got in the car. (And, yes, that number includes some amortization of fixed costs, will be lower some day with electrics, and is probably lower today with an econobox--but the point stands..)
- jessriedel 9y ago
  The marginal cost of cars is not just a function of mileage. There is non-trivial wear from just sitting, and you have to pay interest on the capital cost. This is at least 5% operating cost per year which is mostly eliminated with shared vehicles that are operated continuously.
  - Spooky23 9y ago
    My 2003 Honda carries a $1000 maintenance cost per year. Capitalization costs went away well over a decade ago. It’s still cheaper.
    - jessriedel 9y ago
      Huh? You paid X dollars a long time ago for the Honda. If instead you and your identical neighbors had been sharing a sequence of Hondas which were driven continuously and then replaced, your contribution to the purchase prices (i.e., the total price of all those cars divided by the number of neighbors) would have been less than X dollars (since your Honda is still running). Furthermore, it would have been spread out in payments over 14 years rather than being paid upfront in 2003. Therefore, you could have kept that money in the bank stock market earning interest. That's the cost I'm talking about. The maintenance cost of raw sitting time (rust, freeze-thaw cycles, etc.) are additional.
      - Spooky23 9y ago
        I’m almost 40, live in upstate New York (ie. Cold, snowy). Maintenance for a regularly driven car is all about mileage. Suspension and electronic motors start falling off at $150k miles. Per mechanic friends, most better cars go until about 250k miles with modest maintenance issues, and after that things like transmissions fail and are not a good value. The problem with the pooling is that any outlier blows the financial model. Whatever interest I would make would be wiped out by a single event where I’d need to rent a car. There’s a place for things like Uber (or traditional taxis) and zip car. But unless you barely use a vehicle or cannot afford one, it’s a pain in the ass to share.
        jessriedel 9y ago
        I'm not making any claims about the overall value of ride-sharing an autonomous vehicles. I'm only rebutting the idea that the cost of capitalization are trivial.
  - ghaff 9y ago
    Not just but mostly. The biggest time-based costs are: - Insurance. Some policies have surcharges or discounts based on mileage but it's mostly an annual cost for a typical driver. (Plus excise tax and state inspection.) - In northern states, corrosion due to salt in the winter happens even if you don't drive a car many miles. My Honda dealer is always amazed when I bring in my old '97 Del Sol with minimal rust; I've just garaged it in the winter for about the past decade. - Some fluid, belt, etc. maintenance is time-based - If you want to have a relatively late model car then of course that's a time-based cost. But, if you hold onto a car until it becomes unreliable/expensive to operate then you're back to auto costs being mostly a result of mileage.
    - jessriedel 9y ago
      Yea, I was trying to be extremely conservative with my 5% number, and I think it's much larger due to some of the effects you mention. But I'm a little skeptical time effects are actually larger than mileage ones in total. Do you know a good quantitative argument (even if approximate) for this?
      - ghaff 9y ago
        I'm arguing that mileage effects are much bigger unless you regularly flip cars when, say, a lease expires. AAA publishes car ownership cost numbers. But the big challenge of quantifying this in general is that the relatively fixed component is a lot more for someone who gets a new leased vehicle every three years vs. someone who owns a car for 10-15 years and 150K miles. http://newsroom.aaa.com/tag/driving-cost-per-mile/ http://newsroom.aaa.com/tag/driving-cost-per-mile/
        jessriedel 9y ago
        Oh, sorry I misread your comment. Yes, I agree that mileage costs are probably larger than time costs.
    - dsfyu404ed 9y ago
      Whether costs are mileage or time based vary heavily on the environment. They don't salt the roads in the winter in Silly-Valley so maintenance costs are primarily mileage based. In somewhere like NY it's going to be more time based because the vehicle will corrode at a fairly steady rate and salt solutions will counteract lubricants in places that can't be cleaned out (e.g. wheel bearings and ball joints) at a fairly fixed rate.
zrm 9y ago
> Just like cloud infrastructure, it is more efficient to centralize and rent out capacity as needed. Cloud infrastructure is probably a bad example. It essentially got started at the same time as x64 virtualization was becoming a thing, so you had people comparing the cost of operating 25 physical servers to what Amazon charges for 25 virtual machines and then the virtual machines are obviously a better deal. But one VM host can run all 25 VMs, and if you operate it locally then the latency is much lower (<1ms vs. ~40ms), there is much more local bandwidth (symmetric gigabit or 10G vs. 50Mbps/20Mbps or whatever your site's internet link is), you don't have to pay anyone for those bytes, local servers are still accessible when Comcast is down, your data stays on site instead of being stored who-knows-where accessible to who-knows-who, etc. There are use cases for cloud hosting, high volume static web hosting being the major one because then the data is public, the users aren't local and (this is the main reason) last mile ISPs charge uncompetitive prices for fast WAN connections. But people massively overuse it for other things. Companies that put the local file/print server in The Cloud are doing it wrong.
- zurn 9y ago
  VMware server products launched in 2001 and EC2 launched in 2007. VMs were pretty widespread by the time the cloud hype struck.
Spooky23 9y ago
No way. It’s inefficent for a business trying to make money. As an individual, I don’t have to recognize depreciation nor do I get to deduct depreciation as a non taxable business expense. If it were more cost effective to rent cars, we’d be going to Hertz every month. By the time you build in the overhead, profit, risk, etc, you always pay more. A middle of the road car costs <$0.60/mile to operate, insure, fuel and maintain. Uber is easily 10x that, even with Uber losing money on almost every ride. I’ve been in the business of centralizing technology services for twenty years now. It’s a clear cost savings when you’re offering something that is a commodity that can obtained on the open market. It’s clearly cheaper to rent email. If you have the volume and capital, it’s clearly cheaper to own the fiber between facilities. Outsourcing business process is only cheaper as long as your use profile is static — the change orders kill you. Transportation and people are similar to that. Taking the bus to work is often a money-saver. But paying a $30 uber tax or overpaying for Amazon groceries is just a drag. A family of 4 probably saves enough in paper towels alone to make 1 car payment.
- VintageCool 9y ago
  There are a lot of benefits to a driverless Uber-clone that I think you're overlooking. 1. Driverless Uber means that you don't have to pay for an expensive human driver 2. I expect that the number of driverless taxis will be far more than the current number of taxis+Ubers/Lyfts, because suppliers are limited only by the capital costs of the cars. 2. As a passenger relying on driverless taxis, you no longer have to pay car insurance. 3. You no longer have to pay for parking. 4. You no longer have to find parking. 5. Businesses will no longer have to pay for parking. 6. You don't have to pay Uber for the entire trip -- you can get a taxi from home to a bus stop or light rail station. The benefit of renting a driverless taxi over owning a car is that most commuters are only using their cars for an hour or two a day. This turns car renting into a by-the-hour spot market, which is far more granular than renting a Hertz car for a month. But I think that freedom from parking will be the really big incentive that pushes driverless cars forward. Cars are really big, land in cities is really scarce, and car storage is a really wasteful use of land. We currently have homes and malls and offices surrounded by miles of parking[1]. I expect most of that parking to go away within a decade or two of driverless cars becoming popular, as owners reclaim it for more profitable uses of the land. And without abundant free parking, driverless cars & taxis will become more popular. 1. https://d3i6fh83elv35t.cloudfront.net/newshour/app/uploads/2015/03/RTX10DXS-1024x679.jpg https://d3i6fh83elv35t.cloudfront.net/newshour/app/uploads/2...
pjc50 9y ago
In an era of low interest rates, the capital cost of a car is not huge. I think people are also over-focusing on monetary costs; there are lots of other considerations like convenience, cleanliness, predictability, reliability, and finally social status and taste.
- jessriedel 9y ago
  > In an era of low interest rates, the capital cost of a car is not huge. In the limit of a high utilization rate (i.e., the increased fraction of the time the car is driving, which is probably 5-10), the capital costs are roughly given by the interest rate compounded over the lifetime of the car. Even at just 2% interest, this means a 21% savings if you would otherwise buy a new car every decade. > I think people are also over-focusing on monetary costs; I definitely wasn't suggesting capital costs will be the most important effects, I was just pointing out that an effective 20% discount on car purchase price is non-negligible.
  - pjc50 9y ago
    Sure, but you've also got to account for the return on capital which the equity investors are expecting. They're going to want a lot of that margin.
    - jessriedel 9y ago
      In this comment https://news.ycombinator.com/item?id=15940795 https://news.ycombinator.com/item?id=15940795 I described a procedure for a rideshare co-op in which the members provide their own capital, which, from a capital cost perspective, is a clear win (>20%) compared to the status quo of individually owned cars. The members may in addition decide it's even better for outside investors to provide the capital in exchange for the members paying a monthly fee, but this means the total benefit to members is even larger than the member-capitalized co-op scenario.
  - Spooky23 9y ago
    Everyone needs to make money. The guy who owns the car, the guy who provides the software to drive it and the money guy all need their piece of the action.

ghaff 9y ago

One difference from centralized computing is that a lot of the costs associated with cars are distance-based rather than time-based. If I only drive a car a few thousand miles a year and have it sitting in my driveway/garage in a suburb/the country, it doesn't cost me a lot. That said, a lot of people (such as people who lose money driving for Uber) don't really properly account for their per-mile costs. I expect a lot of people would think twice about their driving habits if they had to feed a meter at 50 cents per mile every time they got in the car. (And, yes, that number includes some amortization of fixed costs, will be lower some day with electrics, and is probably lower today with an econobox--but the point stands..)

jessriedel 9y ago
The marginal cost of cars is not just a function of mileage. There is non-trivial wear from just sitting, and you have to pay interest on the capital cost. This is at least 5% operating cost per year which is mostly eliminated with shared vehicles that are operated continuously.
- Spooky23 9y ago
  My 2003 Honda carries a $1000 maintenance cost per year. Capitalization costs went away well over a decade ago. It’s still cheaper.
  - jessriedel 9y ago
    Huh? You paid X dollars a long time ago for the Honda. If instead you and your identical neighbors had been sharing a sequence of Hondas which were driven continuously and then replaced, your contribution to the purchase prices (i.e., the total price of all those cars divided by the number of neighbors) would have been less than X dollars (since your Honda is still running). Furthermore, it would have been spread out in payments over 14 years rather than being paid upfront in 2003. Therefore, you could have kept that money in the bank stock market earning interest. That's the cost I'm talking about. The maintenance cost of raw sitting time (rust, freeze-thaw cycles, etc.) are additional.
    - Spooky23 9y ago
      I’m almost 40, live in upstate New York (ie. Cold, snowy). Maintenance for a regularly driven car is all about mileage. Suspension and electronic motors start falling off at $150k miles. Per mechanic friends, most better cars go until about 250k miles with modest maintenance issues, and after that things like transmissions fail and are not a good value. The problem with the pooling is that any outlier blows the financial model. Whatever interest I would make would be wiped out by a single event where I’d need to rent a car. There’s a place for things like Uber (or traditional taxis) and zip car. But unless you barely use a vehicle or cannot afford one, it’s a pain in the ass to share.
      - jessriedel 9y ago
        I'm not making any claims about the overall value of ride-sharing an autonomous vehicles. I'm only rebutting the idea that the cost of capitalization are trivial.
- ghaff 9y ago
  Not just but mostly. The biggest time-based costs are: - Insurance. Some policies have surcharges or discounts based on mileage but it's mostly an annual cost for a typical driver. (Plus excise tax and state inspection.) - In northern states, corrosion due to salt in the winter happens even if you don't drive a car many miles. My Honda dealer is always amazed when I bring in my old '97 Del Sol with minimal rust; I've just garaged it in the winter for about the past decade. - Some fluid, belt, etc. maintenance is time-based - If you want to have a relatively late model car then of course that's a time-based cost. But, if you hold onto a car until it becomes unreliable/expensive to operate then you're back to auto costs being mostly a result of mileage.
  - jessriedel 9y ago
    Yea, I was trying to be extremely conservative with my 5% number, and I think it's much larger due to some of the effects you mention. But I'm a little skeptical time effects are actually larger than mileage ones in total. Do you know a good quantitative argument (even if approximate) for this?
    - ghaff 9y ago
      I'm arguing that mileage effects are much bigger unless you regularly flip cars when, say, a lease expires. AAA publishes car ownership cost numbers. But the big challenge of quantifying this in general is that the relatively fixed component is a lot more for someone who gets a new leased vehicle every three years vs. someone who owns a car for 10-15 years and 150K miles. http://newsroom.aaa.com/tag/driving-cost-per-mile/ http://newsroom.aaa.com/tag/driving-cost-per-mile/
      - jessriedel 9y ago
        Oh, sorry I misread your comment. Yes, I agree that mileage costs are probably larger than time costs.
  - dsfyu404ed 9y ago
    Whether costs are mileage or time based vary heavily on the environment. They don't salt the roads in the winter in Silly-Valley so maintenance costs are primarily mileage based. In somewhere like NY it's going to be more time based because the vehicle will corrode at a fairly steady rate and salt solutions will counteract lubricants in places that can't be cleaned out (e.g. wheel bearings and ball joints) at a fairly fixed rate.

zrm 9y ago

> Just like cloud infrastructure, it is more efficient to centralize and rent out capacity as needed. Cloud infrastructure is probably a bad example. It essentially got started at the same time as x64 virtualization was becoming a thing, so you had people comparing the cost of operating 25 physical servers to what Amazon charges for 25 virtual machines and then the virtual machines are obviously a better deal. But one VM host can run all 25 VMs, and if you operate it locally then the latency is much lower (<1ms vs. ~40ms), there is much more local bandwidth (symmetric gigabit or 10G vs. 50Mbps/20Mbps or whatever your site's internet link is), you don't have to pay anyone for those bytes, local servers are still accessible when Comcast is down, your data stays on site instead of being stored who-knows-where accessible to who-knows-who, etc. There are use cases for cloud hosting, high volume static web hosting being the major one because then the data is public, the users aren't local and (this is the main reason) last mile ISPs charge uncompetitive prices for fast WAN connections. But people massively overuse it for other things. Companies that put the local file/print server in The Cloud are doing it wrong.

zurn 9y ago
VMware server products launched in 2001 and EC2 launched in 2007. VMs were pretty widespread by the time the cloud hype struck.

Spooky23 9y ago

No way. It’s inefficent for a business trying to make money. As an individual, I don’t have to recognize depreciation nor do I get to deduct depreciation as a non taxable business expense. If it were more cost effective to rent cars, we’d be going to Hertz every month. By the time you build in the overhead, profit, risk, etc, you always pay more. A middle of the road car costs <$0.60/mile to operate, insure, fuel and maintain. Uber is easily 10x that, even with Uber losing money on almost every ride. I’ve been in the business of centralizing technology services for twenty years now. It’s a clear cost savings when you’re offering something that is a commodity that can obtained on the open market. It’s clearly cheaper to rent email. If you have the volume and capital, it’s clearly cheaper to own the fiber between facilities. Outsourcing business process is only cheaper as long as your use profile is static — the change orders kill you. Transportation and people are similar to that. Taking the bus to work is often a money-saver. But paying a $30 uber tax or overpaying for Amazon groceries is just a drag. A family of 4 probably saves enough in paper towels alone to make 1 car payment.

VintageCool 9y ago
There are a lot of benefits to a driverless Uber-clone that I think you're overlooking. 1. Driverless Uber means that you don't have to pay for an expensive human driver 2. I expect that the number of driverless taxis will be far more than the current number of taxis+Ubers/Lyfts, because suppliers are limited only by the capital costs of the cars. 2. As a passenger relying on driverless taxis, you no longer have to pay car insurance. 3. You no longer have to pay for parking. 4. You no longer have to find parking. 5. Businesses will no longer have to pay for parking. 6. You don't have to pay Uber for the entire trip -- you can get a taxi from home to a bus stop or light rail station. The benefit of renting a driverless taxi over owning a car is that most commuters are only using their cars for an hour or two a day. This turns car renting into a by-the-hour spot market, which is far more granular than renting a Hertz car for a month. But I think that freedom from parking will be the really big incentive that pushes driverless cars forward. Cars are really big, land in cities is really scarce, and car storage is a really wasteful use of land. We currently have homes and malls and offices surrounded by miles of parking[1]. I expect most of that parking to go away within a decade or two of driverless cars becoming popular, as owners reclaim it for more profitable uses of the land. And without abundant free parking, driverless cars & taxis will become more popular. 1. https://d3i6fh83elv35t.cloudfront.net/newshour/app/uploads/2015/03/RTX10DXS-1024x679.jpg https://d3i6fh83elv35t.cloudfront.net/newshour/app/uploads/2...

pjc50 9y ago

In an era of low interest rates, the capital cost of a car is not huge. I think people are also over-focusing on monetary costs; there are lots of other considerations like convenience, cleanliness, predictability, reliability, and finally social status and taste.

jessriedel 9y ago
> In an era of low interest rates, the capital cost of a car is not huge. In the limit of a high utilization rate (i.e., the increased fraction of the time the car is driving, which is probably 5-10), the capital costs are roughly given by the interest rate compounded over the lifetime of the car. Even at just 2% interest, this means a 21% savings if you would otherwise buy a new car every decade. > I think people are also over-focusing on monetary costs; I definitely wasn't suggesting capital costs will be the most important effects, I was just pointing out that an effective 20% discount on car purchase price is non-negligible.
- pjc50 9y ago
  Sure, but you've also got to account for the return on capital which the equity investors are expecting. They're going to want a lot of that margin.
  - jessriedel 9y ago
    In this comment https://news.ycombinator.com/item?id=15940795 https://news.ycombinator.com/item?id=15940795 I described a procedure for a rideshare co-op in which the members provide their own capital, which, from a capital cost perspective, is a clear win (>20%) compared to the status quo of individually owned cars. The members may in addition decide it's even better for outside investors to provide the capital in exchange for the members paying a monthly fee, but this means the total benefit to members is even larger than the member-capitalized co-op scenario.
- Spooky23 9y ago
  Everyone needs to make money. The guy who owns the car, the guy who provides the software to drive it and the money guy all need their piece of the action.