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In this scenario there's no moat for Lyft/Uber either. If Waymo can meet demand, they'll be able to undercut ride sharing prices so deeply that most consumers w

In this scenario there's no moat for Lyft/Uber either. If Waymo can meet demand, they'll be able to undercut ride sharing prices so deeply that most consumers will switch overnight. Banks will be falling over themselves to provide the massive credit they'll need to bankroll the expansion.

CPLX 8y ago
> they'll be able to undercut ride sharing prices Why? I see comments like this constantly. But does anyone ever do even a basic spreadsheet to explain the unit economics of this argument? Low skilled people who can drive are pretty cheap and plentiful. Even if self-driving tech is flawless (spoiler: it's not and won't be soon) it still only replaces part of their responsibilities. Someone will still have to clean the cars for example. Presumably there will be some required level of human monitoring, etc. Conversely, capital and highly reliable technology isn't free. You can calculate pretty easily the rate at which it's profitable to substitute technology for labor, this is a trade-off we've literally been making for centuries. One one side you have plentiful cheap low skilled labor. On the other you have lasers, fast computers, graphics cards, cameras, and the associated programming inspection and maintenance costs. Why do we think the latter side is going to be cheaper in anything remotely like the near term?
- Fricken 8y ago
  Waymo doesn't have a business model if it isn't cheaper. It probably won't be much cheaper in the near term.
  - CPLX 8y ago
    That's not true at all. There are a lot more use cases for self driving technology than taxi services. In fact I'm continuously perplexed as to why this specific use case, which is obviously the most challenging and likely to be the last to reach the market, is always first in these discussions.
    - Fricken 8y ago
      There are very good reasons as to why Waymo and all the other major players are focused on robotaxis. A truck still needs to be able to drive in cities, and if you figure out how to automate all the other thing a trucker does you can replace 3 million of them. Big whoop. Robotaxis stand to challenge the economics of personal vehicle ownership, the potential market is many orders of magnitude larger.
      - CPLX 8y ago
        Why can't they just have normal cars for sale that also drive themselves to start with? Like I have a car and recline and read a book on a commute most of the time. If snow gets crazy or there's very strange construction or a flooded road or a flat tire we go back to manual driving. That's plausible and incremental. No cleaning problems, no homeless people living in them, no need for remote monitoring, a far simpler liability and insurance situation, and so on. My assumption is we'll start talking seriously about robotaxis on the day this scenario is practical and battle tested. The idea of starting with taxis seems ludicrous in comparison.
        jonknee 8y ago
        > That's plausible and incremental. No cleaning problems, no homeless people living in them, no need for remote monitoring, a far simpler liability and insurance situation, and so on. These are all solved problems, I mean when was the last time you saw a homeless person camped out in a Zip Car? BMW's ReachNow vehicles are all over Seattle and they are clean, insured, fueled/charged and exactly 0 people live in them.
        CPLX 8y ago
        I live in Brooklyn, where ReachNow launched with much excitement and pulled out within a year or so due to problems with maintenance, damage to cars, and difficulty with the technology.
      - notheguyouthink 8y ago
- jtbayly 8y ago
  First, I've read over and over that the single largest cost in transportation is human labor (the driver). Low-skilled and low-paid they might be, but if you can replace them with a low-paid person behind a monitor that can handle 8-10 trips at once, you've saved a substantial portion of the labor cost. Yes, that cost will be offset by the cost of the extra hardware, but that can be amortized over tens (possibly hundreds) of thousands of miles. Likewise, the investment in software (programmers) will eat into profits, but once again, you can spread that cost out over hundreds of thousands or millions of cars. Besides, an awful lot of the latter is a sunk cost at this point.
- ben_w 8y ago
  > One one side you have plentiful cheap low skilled labor. On the other you have lasers, fast computers, graphics cards, cameras, and the associated programming inspection and maintenance costs. Why do we think the latter side is going to be cheaper in anything remotely like the near term? Because, other than inspection and maintenance costs, everything on your list has been getting much cheaper really quickly for a long time.
- abathur 8y ago
  I don't disagree that some may be over-estimating how much cost can pragmatically be cut, but I also think you may be glossing over some of the costs and inefficiencies that come with operating a large heterogenous operation comprised of individuals and personal or rented vehicles. A company deploying large mostly-homogenous autonomous fleets may be able to benefit from: - we probably don't need to tip AVs - economies of scale on obtaining vehicles, fuel, maintenance, and cleaning - tuning maintenance/cleaning schedules across a fleet towards keeping vehicles in service for longer - may be able to perform cleaning/maintenance during off-hours, vs owners who'll often have to trade working hours to do these tasks - autonomous systems may drive (and be tuned towards) in ways that also help preserve long-term vehicle value and minimize costs - lower insurance, legal, and PR costs if they outperform human drivers, don't molest/murder passengers, etc. - minimizing costs around acquiring and managing a human workforce - there are probably many small ways to optimize the positioning and functioning of an AV fleet that just won't work with a large contractor fleet That said, the potential for a lot of these savings depends on current prices actually reflecting these components. It may very well be more expensive to perform some of these activities, no matter how efficiently, than to exploitively externalize their costs on drivers and riders.
  - abathur 8y ago
    I haven't looked for work on the price/demand relationship here, but it's also worth noting that price reductions may not just purely be a matter of cutting costs and passing those on at a static ridership and profit level. There are likely to be some price points that profoundly change user behavior To give an example, my favorite coffee shop is about 7 minutes (+wait) from my apartment by car either way, and around 18-26 minutes (+wait) by bus (shorter there, longer back). Without a ride pass and with tip, it's probably around $7-8 to Uber this one way, vs. $1.25 for the bus. At this price, I'll usually only Uber if heat or rain make getting to and from the bus miserable. I have a ride pass atm that knocks this down to around $6-7 with tip, which makes me marginally more likely to take Uber, but it isn't my default. I took the bus this past Sunday morning, planning to get some open source work done, but I'd forgotten my laptop wasn't in my bag. The time/sweat cost of the bus round trip and the money cost of the Uber round trip were high enough that I just sat and read a book instead. I'm not sure exactly where, but somewhere between ~$2-5 total, I'd probably default to taking Uber both ways. Down at the low end of that range, I even would've gone back for the forgotten laptop.
- deepnotderp 8y ago
  > "One one side you have plentiful cheap low skilled labor. On the other you have lasers, fast computers, graphics cards, cameras, and the associated programming inspection and maintenance costs. Why do we think the latter side is going to be cheaper in anything remotely like the near term?" That's a weird thought to have. Humans need on the order of ~15K a year in the US. On the other hand, even an ultra high end SDC computer costs only around ~12K in production and much, much less to actually make since Waymo will no doubt use their own TPUs. Lasers are cheap, compact and efficient fiber lasers. Cameras are mass produced in immense volume and are dirt cheap for very high quality. The only other factor is software development costs which is mostly a fixed cost.
- jonknee 8y ago
  Uber currently pays these "low skilled people" ~75% of the fare which leaves a lot of headroom to lower prices and still pay for vehicles and cleaning. Rental car companies show how few people it takes to maintain a very large fleet of vehicles and it will take even fewer if they can drive themselves (an autonomous car can go through a wash on its own, charge itself, show up at a detailing station on demand, etc).
  - CPLX 8y ago
    What is the makeup of that 75% number? Does that number reflect an analysis of the cost of the actual human work of driving the car only, or is that just the number for average actual remittances from Uber to the driver? If so it includes assumption of capital risks, auto depreciation, gas, tire wear, broken glass, vandalism and cleaning, traffic tickets, maintenance, towing, and every other expense of physically delivering the ride. Getting rid of the human driver only saves real money on driving labor. The payments to drivers have much more to them.
- IanCal 8y ago
  People are expensive. Very expensive. Covering 24h/day requires 4.7 regular week workers, which in the UK will cost (for workers over 25) a minimum of £80k. That's just raw salary and basic taxes, other things push it up (as well as the fact that you can't get people to work exact hours consistently so well and people are I'll, etc). So per "baseload" taxi, that's likely £100k/year minimum in human costs in the UK. If the tech has only a few year lifespan you've still got north of a quarter of a million to spend on the self driving things alone. The number of hours per day the car needs cleaning will be drastically lower than the hours it needs driving.
- deleted 8y ago
  [deleted]

CPLX 8y ago

> they'll be able to undercut ride sharing prices Why? I see comments like this constantly. But does anyone ever do even a basic spreadsheet to explain the unit economics of this argument? Low skilled people who can drive are pretty cheap and plentiful. Even if self-driving tech is flawless (spoiler: it's not and won't be soon) it still only replaces part of their responsibilities. Someone will still have to clean the cars for example. Presumably there will be some required level of human monitoring, etc. Conversely, capital and highly reliable technology isn't free. You can calculate pretty easily the rate at which it's profitable to substitute technology for labor, this is a trade-off we've literally been making for centuries. One one side you have plentiful cheap low skilled labor. On the other you have lasers, fast computers, graphics cards, cameras, and the associated programming inspection and maintenance costs. Why do we think the latter side is going to be cheaper in anything remotely like the near term?

Fricken 8y ago
Waymo doesn't have a business model if it isn't cheaper. It probably won't be much cheaper in the near term.
- CPLX 8y ago
  That's not true at all. There are a lot more use cases for self driving technology than taxi services. In fact I'm continuously perplexed as to why this specific use case, which is obviously the most challenging and likely to be the last to reach the market, is always first in these discussions.
  - Fricken 8y ago
    There are very good reasons as to why Waymo and all the other major players are focused on robotaxis. A truck still needs to be able to drive in cities, and if you figure out how to automate all the other thing a trucker does you can replace 3 million of them. Big whoop. Robotaxis stand to challenge the economics of personal vehicle ownership, the potential market is many orders of magnitude larger.
    - CPLX 8y ago
      Why can't they just have normal cars for sale that also drive themselves to start with? Like I have a car and recline and read a book on a commute most of the time. If snow gets crazy or there's very strange construction or a flooded road or a flat tire we go back to manual driving. That's plausible and incremental. No cleaning problems, no homeless people living in them, no need for remote monitoring, a far simpler liability and insurance situation, and so on. My assumption is we'll start talking seriously about robotaxis on the day this scenario is practical and battle tested. The idea of starting with taxis seems ludicrous in comparison.
      - jonknee 8y ago
        > That's plausible and incremental. No cleaning problems, no homeless people living in them, no need for remote monitoring, a far simpler liability and insurance situation, and so on. These are all solved problems, I mean when was the last time you saw a homeless person camped out in a Zip Car? BMW's ReachNow vehicles are all over Seattle and they are clean, insured, fueled/charged and exactly 0 people live in them.
        CPLX 8y ago
        I live in Brooklyn, where ReachNow launched with much excitement and pulled out within a year or so due to problems with maintenance, damage to cars, and difficulty with the technology.
    - notheguyouthink 8y ago
jtbayly 8y ago
First, I've read over and over that the single largest cost in transportation is human labor (the driver). Low-skilled and low-paid they might be, but if you can replace them with a low-paid person behind a monitor that can handle 8-10 trips at once, you've saved a substantial portion of the labor cost. Yes, that cost will be offset by the cost of the extra hardware, but that can be amortized over tens (possibly hundreds) of thousands of miles. Likewise, the investment in software (programmers) will eat into profits, but once again, you can spread that cost out over hundreds of thousands or millions of cars. Besides, an awful lot of the latter is a sunk cost at this point.
ben_w 8y ago
> One one side you have plentiful cheap low skilled labor. On the other you have lasers, fast computers, graphics cards, cameras, and the associated programming inspection and maintenance costs. Why do we think the latter side is going to be cheaper in anything remotely like the near term? Because, other than inspection and maintenance costs, everything on your list has been getting much cheaper really quickly for a long time.
abathur 8y ago
I don't disagree that some may be over-estimating how much cost can pragmatically be cut, but I also think you may be glossing over some of the costs and inefficiencies that come with operating a large heterogenous operation comprised of individuals and personal or rented vehicles. A company deploying large mostly-homogenous autonomous fleets may be able to benefit from: - we probably don't need to tip AVs - economies of scale on obtaining vehicles, fuel, maintenance, and cleaning - tuning maintenance/cleaning schedules across a fleet towards keeping vehicles in service for longer - may be able to perform cleaning/maintenance during off-hours, vs owners who'll often have to trade working hours to do these tasks - autonomous systems may drive (and be tuned towards) in ways that also help preserve long-term vehicle value and minimize costs - lower insurance, legal, and PR costs if they outperform human drivers, don't molest/murder passengers, etc. - minimizing costs around acquiring and managing a human workforce - there are probably many small ways to optimize the positioning and functioning of an AV fleet that just won't work with a large contractor fleet That said, the potential for a lot of these savings depends on current prices actually reflecting these components. It may very well be more expensive to perform some of these activities, no matter how efficiently, than to exploitively externalize their costs on drivers and riders.
- abathur 8y ago
  I haven't looked for work on the price/demand relationship here, but it's also worth noting that price reductions may not just purely be a matter of cutting costs and passing those on at a static ridership and profit level. There are likely to be some price points that profoundly change user behavior To give an example, my favorite coffee shop is about 7 minutes (+wait) from my apartment by car either way, and around 18-26 minutes (+wait) by bus (shorter there, longer back). Without a ride pass and with tip, it's probably around $7-8 to Uber this one way, vs. $1.25 for the bus. At this price, I'll usually only Uber if heat or rain make getting to and from the bus miserable. I have a ride pass atm that knocks this down to around $6-7 with tip, which makes me marginally more likely to take Uber, but it isn't my default. I took the bus this past Sunday morning, planning to get some open source work done, but I'd forgotten my laptop wasn't in my bag. The time/sweat cost of the bus round trip and the money cost of the Uber round trip were high enough that I just sat and read a book instead. I'm not sure exactly where, but somewhere between ~$2-5 total, I'd probably default to taking Uber both ways. Down at the low end of that range, I even would've gone back for the forgotten laptop.
deepnotderp 8y ago
> "One one side you have plentiful cheap low skilled labor. On the other you have lasers, fast computers, graphics cards, cameras, and the associated programming inspection and maintenance costs. Why do we think the latter side is going to be cheaper in anything remotely like the near term?" That's a weird thought to have. Humans need on the order of ~15K a year in the US. On the other hand, even an ultra high end SDC computer costs only around ~12K in production and much, much less to actually make since Waymo will no doubt use their own TPUs. Lasers are cheap, compact and efficient fiber lasers. Cameras are mass produced in immense volume and are dirt cheap for very high quality. The only other factor is software development costs which is mostly a fixed cost.
jonknee 8y ago
Uber currently pays these "low skilled people" ~75% of the fare which leaves a lot of headroom to lower prices and still pay for vehicles and cleaning. Rental car companies show how few people it takes to maintain a very large fleet of vehicles and it will take even fewer if they can drive themselves (an autonomous car can go through a wash on its own, charge itself, show up at a detailing station on demand, etc).
- CPLX 8y ago
  What is the makeup of that 75% number? Does that number reflect an analysis of the cost of the actual human work of driving the car only, or is that just the number for average actual remittances from Uber to the driver? If so it includes assumption of capital risks, auto depreciation, gas, tire wear, broken glass, vandalism and cleaning, traffic tickets, maintenance, towing, and every other expense of physically delivering the ride. Getting rid of the human driver only saves real money on driving labor. The payments to drivers have much more to them.
IanCal 8y ago
People are expensive. Very expensive. Covering 24h/day requires 4.7 regular week workers, which in the UK will cost (for workers over 25) a minimum of £80k. That's just raw salary and basic taxes, other things push it up (as well as the fact that you can't get people to work exact hours consistently so well and people are I'll, etc). So per "baseload" taxi, that's likely £100k/year minimum in human costs in the UK. If the tech has only a few year lifespan you've still got north of a quarter of a million to spend on the self driving things alone. The number of hours per day the car needs cleaning will be drastically lower than the hours it needs driving.
deleted 8y ago
[deleted]