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That's assuming that there's zero R&D. In practice, the fixed costs of R&D in the AV space are pretty large. If for example it takes 500 engineers that cost 25

by jfim 4y ago

That's assuming that there's zero R&D. In practice, the fixed costs of R&D in the AV space are pretty large. If for example it takes 500 engineers that cost 250k per year to make the trucks self driving, then you're spending 125M per year just in engineer salaries. That's of course excluding any of the costs spent on things like data storage (cameras and lidars generate a ton of data), compute (ML eats a ton of processing), data labeling, mapping, vehicle testing, fleet management, regulatory compliance, etc.

zmgsabst 4y ago
Sure — it’s looking at the unit cost. There are 2M semi-trucks in the US, so if half are automated (1M), you can spend $1B per year for $1k per truck per year. Which doesn’t substantially change my calculations. That’s my point: the unit costs are so ridiculously good that pulling $10k/yr in tech overhead, or $10B/yr total, you’d still come out ahead in 5 years. Phrased another way: we can spend $100B across a decade to develop automated trucking, and the consequence would be our automated trucks break even in three to five years instead of two to three years, after amortizing the R+D. I didn’t assess the operations because I couldn’t find a good metric on how much that costs now - and hand waved fleet maintenance, testing, regulation, etc as approximately the cost of the current burdens for those things.
- jfim 4y ago
  Oh, I agree with you, the numbers are mind boggling. Just in the US, there are 3 trillion miles driven per year, so even capturing a small part of that (be it through automating long haul trucking, goods delivery, or robotaxi applications) and getting any kind of per mile/per hour revenue makes some pretty large numbers. It's just that the AV players absolutely need to operate at scale, as their fixed costs are really high compared to a traditional trucking company.
  - zmgsabst 4y ago
    I’m not sure that R+D needs to be at the operator versus manufacturer level. For instance, manufacturers not operators bear the R+D cost of better diesel engines. You can retain (relatively) small fleets if the manufacturer is amortizing the cost of technology across vehicles sold.
    - jfim 4y ago
      It really depends on whether the AV companies decide to focus purely on manufacturing and developing AVs as a product (profit at the point of sale), offer them as a service (similar to "power by the hour" in aerospace), or decide to become robotaxi/truck fleet operators to capture more profit.

by jfim 4y ago

zmgsabst 4y ago

Sure — it’s looking at the unit cost. There are 2M semi-trucks in the US, so if half are automated (1M), you can spend $1B per year for $1k per truck per year. Which doesn’t substantially change my calculations. That’s my point: the unit costs are so ridiculously good that pulling $10k/yr in tech overhead, or $10B/yr total, you’d still come out ahead in 5 years. Phrased another way: we can spend $100B across a decade to develop automated trucking, and the consequence would be our automated trucks break even in three to five years instead of two to three years, after amortizing the R+D. I didn’t assess the operations because I couldn’t find a good metric on how much that costs now - and hand waved fleet maintenance, testing, regulation, etc as approximately the cost of the current burdens for those things.

jfim 4y ago
Oh, I agree with you, the numbers are mind boggling. Just in the US, there are 3 trillion miles driven per year, so even capturing a small part of that (be it through automating long haul trucking, goods delivery, or robotaxi applications) and getting any kind of per mile/per hour revenue makes some pretty large numbers. It's just that the AV players absolutely need to operate at scale, as their fixed costs are really high compared to a traditional trucking company.
- zmgsabst 4y ago
  I’m not sure that R+D needs to be at the operator versus manufacturer level. For instance, manufacturers not operators bear the R+D cost of better diesel engines. You can retain (relatively) small fleets if the manufacturer is amortizing the cost of technology across vehicles sold.
  - jfim 4y ago
    It really depends on whether the AV companies decide to focus purely on manufacturing and developing AVs as a product (profit at the point of sale), offer them as a service (similar to "power by the hour" in aerospace), or decide to become robotaxi/truck fleet operators to capture more profit.