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You need to consider profit margins. The cost of showing somebody an ad is very near $0, which is what makes digital products so profitable. But when you do thi

You need to consider profit margins. The cost of showing somebody an ad is very near $0, which is what makes digital products so profitable. But when you do things in the real world, especially in highly competitive markets where the customer is extremely price sensitive, your profit per mile is going to approach $0. For instance WalMart's profit per item sold is less than 3%, and for driving this will likely be substantially lower (given the combination of customer price sensitivity + competition). The way you make up for this is in massive volume, but Waymo for now remains a heavily ringfenced operation and so it's not entirely clear how they reach scale. Google also has a very poor record of long-term performance in competitive markets. The winner in self driving will likely be enabled by extreme vertical integration - you want to be building your own cars, cleaning your own cars, repairing your own cars, and so on.

crazygringo 1y ago
The average American sees something like $500 of ads that go through Google per year. There's a profit margin of around 50% since Google has to pay publishers and pay for running search. So that's $250/person in profit per year. The average American spends something like $12,500 in car+taxi/rideshare per year. Suppose with Waymo that goes down to $7,000 and it's 20% profit. That's $1,400/person in profit per year. Obviously it gets much more complicated -- the profit margin depends on whether there are serious competitors to Waymo and how much Waymo's head start matters. Waymo will bring costs down further with shared vans and buses on demand. Profitability will rise with video ads in vehicles that you pay not to see. And so forth. But autonomous rideshare is going to be larger than search any way you look at it. Profits won't be as high as search, but the barriers to entry are so high that profits will be high for a long time.
- somenameforme 1y ago
  Those data you referenced are per household, not per person, and the majority of that is loan+insurance. The actual cost in terms of maintenance, fuel, etc is quite low, and that's the price that eventually will be the goal line for autotaxi companies. 20% [net] profit margins do not generally exist in competitive real world industries, outside of perhaps something like real estate. A net profit margin of 5% would be huge, and I think it will likely be much closer to 1%, or even less, simply because in the end it's going to be a commodity where all that matters is price. I also think you're overestimating the impact of things like ads, buses, etc. The second Waymos become less pleasant than any remotely comparably priced option, they will lose customers.
  - crazygringo 1y ago
    No it's per adult not per household. The average household has 2.2 cars, so the figure per household is much higher. And it doesn't matter what proportion is loan vs insurance vs maintenance vs fuel, because Waymo replaces literally all of it. And yes I assume Waymo will have high profit margins for an extended period of time because they have such a massive head start, and for a long time will be competing primarily against rideshare with human drivers, so won't be pushed below that. Their marginal costs will be much cheaper than that, not having to pay drivers. Hence 20% is not unreasonable. Then, even in the long term, the economies of scale they develop and network effects will continue to give them a significant advantage. Not 20% margins, but way more than 1%. Especially as they start to vertically integrate the hardware at some point.
    - somenameforme 1y ago
      Here is where you would generally cite sources. [1] Those are the data from the BLS. Total transport spending per household is $13,174. The term they use is consumer unit, which you may have conflated with consumer/person, but it's practically the same as household. There are 134m consumer units, and 131m households. Waymo is currently charging substantially more than Lyft/Uber and is not profitable. Human drivers can taxi in anything with 4 wheels and a hood, and its 100% their responsibility to take care of their vehicle, fuel it, clean it, and so on. Each Waymo currently costs ~$200,000 and is going to have a proportionally higher maintenance costs, and all of those costs must be covered by Google. So their costs are far higher than you're ballparking. As for competition - Tesla has already launched a live robotaxi trial in Austin, so it's already here. [1] - https://www.bls.gov/news.release/pdf/cesan.pdf https://www.bls.gov/news.release/pdf/cesan.pdf
      - metabagel 1y ago
        Can’t imagine Tesla will be able to remove the passenger seat safety monitor any time in the next 5 years. Refusal to install lidar means Tesla’s AI has to be 100% perfect, which won’t happen for a long time, if ever.
      - 1y ago
- robotresearcher 1y ago
  If that’s the case, why aren’t taxis much more popular than they are? Does autonomy make so much difference? Uber drivers are not well paid, and the Waymo sensor suite is very expensive today.

crazygringo 1y ago

The average American sees something like $500 of ads that go through Google per year. There's a profit margin of around 50% since Google has to pay publishers and pay for running search. So that's $250/person in profit per year. The average American spends something like $12,500 in car+taxi/rideshare per year. Suppose with Waymo that goes down to $7,000 and it's 20% profit. That's $1,400/person in profit per year. Obviously it gets much more complicated -- the profit margin depends on whether there are serious competitors to Waymo and how much Waymo's head start matters. Waymo will bring costs down further with shared vans and buses on demand. Profitability will rise with video ads in vehicles that you pay not to see. And so forth. But autonomous rideshare is going to be larger than search any way you look at it. Profits won't be as high as search, but the barriers to entry are so high that profits will be high for a long time.

somenameforme 1y ago
Those data you referenced are per household, not per person, and the majority of that is loan+insurance. The actual cost in terms of maintenance, fuel, etc is quite low, and that's the price that eventually will be the goal line for autotaxi companies. 20% [net] profit margins do not generally exist in competitive real world industries, outside of perhaps something like real estate. A net profit margin of 5% would be huge, and I think it will likely be much closer to 1%, or even less, simply because in the end it's going to be a commodity where all that matters is price. I also think you're overestimating the impact of things like ads, buses, etc. The second Waymos become less pleasant than any remotely comparably priced option, they will lose customers.
- crazygringo 1y ago
  No it's per adult not per household. The average household has 2.2 cars, so the figure per household is much higher. And it doesn't matter what proportion is loan vs insurance vs maintenance vs fuel, because Waymo replaces literally all of it. And yes I assume Waymo will have high profit margins for an extended period of time because they have such a massive head start, and for a long time will be competing primarily against rideshare with human drivers, so won't be pushed below that. Their marginal costs will be much cheaper than that, not having to pay drivers. Hence 20% is not unreasonable. Then, even in the long term, the economies of scale they develop and network effects will continue to give them a significant advantage. Not 20% margins, but way more than 1%. Especially as they start to vertically integrate the hardware at some point.
  - somenameforme 1y ago
    Here is where you would generally cite sources. [1] Those are the data from the BLS. Total transport spending per household is $13,174. The term they use is consumer unit, which you may have conflated with consumer/person, but it's practically the same as household. There are 134m consumer units, and 131m households. Waymo is currently charging substantially more than Lyft/Uber and is not profitable. Human drivers can taxi in anything with 4 wheels and a hood, and its 100% their responsibility to take care of their vehicle, fuel it, clean it, and so on. Each Waymo currently costs ~$200,000 and is going to have a proportionally higher maintenance costs, and all of those costs must be covered by Google. So their costs are far higher than you're ballparking. As for competition - Tesla has already launched a live robotaxi trial in Austin, so it's already here. [1] - https://www.bls.gov/news.release/pdf/cesan.pdf https://www.bls.gov/news.release/pdf/cesan.pdf
    - metabagel 1y ago
      Can’t imagine Tesla will be able to remove the passenger seat safety monitor any time in the next 5 years. Refusal to install lidar means Tesla’s AI has to be 100% perfect, which won’t happen for a long time, if ever.
    - 1y ago
robotresearcher 1y ago
If that’s the case, why aren’t taxis much more popular than they are? Does autonomy make so much difference? Uber drivers are not well paid, and the Waymo sensor suite is very expensive today.