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Let’s say Waymo get to legit, truly market ready SDC taxi tech 3 years before Uber, and they start expanding into Uber’s markets at lower prices. This is bad f

by yashap 8y ago

Let’s say Waymo get to legit, truly market ready SDC taxi tech 3 years before Uber, and they start expanding into Uber’s markets at lower prices. This is bad for Uber, but hardly the end of their business. People won’t immediately trust SDCs, so Uber will lose market share only gradually even if their prices are higher. Plus Waymo have to scale up massively to significantly compete with Uber - that’ll take time. If Waymo don’t make much of a dent in Uber’s market share in 3 years, Uber gets their SDC tech to market and problem solved. If they DO start making a big dent, Uber can likely raise enough money to simply drop prices to Waymo levels (with human drivers), and just bleed cash until they get the tech out to be profitable. Uber (and their investors) are well versed in this strategy.

devit 8y ago
But given that Uber is not profitable now competing with Lyft both with human drivers, why would it be profitable tomorrow competing with Waymo both with SDCs? Even if the profit is no longer negative, it should be near zero since there is not much moat, and it's not even clear whether Uber would be able to compete at all against Waymo (better tech) or even carmakers who own the cars. The only thing Uber has is brand recognition, but Google Maps actually has even more brand recognition and that's where Waymo is going to be unless antitrust prevents it somehow.
panarky 8y ago
The conventional wisdom is that self-driving cars will be much cheaper than rideshare, and the only question is when they'll reach level-5 autonomy. But what if they're not actually significantly cheaper? Let's say an Uber driver who works 60 hours gets paid $1,200 gross, or $20 per hour. Could the self-driving car drive the same trips with $1,200 lower cost? Not a chance. Because the $1,200 paid to the Uber driver isn't just for the driver's time, it's also for the reduced resale value of the car, and for fuel, and tires, and repairs. And those costs for the self-driving car will be much higher because the self-driving vehicle will be newer, and larger, and loaded with expensive computers and lidar. The self-driving car will also require 24/7 realtime monitoring, and customer support, and a depot staffed with technicians, and a field service team. The IRS rate for deducting business use of a vehicle is $0.58 per mile, not including the driver's time. I'd bet the cost of an autonomous car will be well north of that.
- anitil 8y ago
  I can see this being a case where the second mover has the advantage. Ie let Waymo struggle to find profitability, then hire away their talent and have at it.

by yashap 8y ago

devit 8y ago

But given that Uber is not profitable now competing with Lyft both with human drivers, why would it be profitable tomorrow competing with Waymo both with SDCs? Even if the profit is no longer negative, it should be near zero since there is not much moat, and it's not even clear whether Uber would be able to compete at all against Waymo (better tech) or even carmakers who own the cars. The only thing Uber has is brand recognition, but Google Maps actually has even more brand recognition and that's where Waymo is going to be unless antitrust prevents it somehow.

panarky 8y ago

The conventional wisdom is that self-driving cars will be much cheaper than rideshare, and the only question is when they'll reach level-5 autonomy. But what if they're not actually significantly cheaper? Let's say an Uber driver who works 60 hours gets paid $1,200 gross, or $20 per hour. Could the self-driving car drive the same trips with $1,200 lower cost? Not a chance. Because the $1,200 paid to the Uber driver isn't just for the driver's time, it's also for the reduced resale value of the car, and for fuel, and tires, and repairs. And those costs for the self-driving car will be much higher because the self-driving vehicle will be newer, and larger, and loaded with expensive computers and lidar. The self-driving car will also require 24/7 realtime monitoring, and customer support, and a depot staffed with technicians, and a field service team. The IRS rate for deducting business use of a vehicle is $0.58 per mile, not including the driver's time. I'd bet the cost of an autonomous car will be well north of that.

anitil 8y ago
I can see this being a case where the second mover has the advantage. Ie let Waymo struggle to find profitability, then hire away their talent and have at it.