Non Forbes

Robotaxi Economics

The vision of many of us for robocars is a world of less private car ownership and more use of robotaxis -- on demand ride service in a robocar. That's what companies like Uber clearly are pushing for, and probably Google, but several of the big car companies including Mercedes, Ford and BMW among others have also said they want to get there -- in the case of Ford, without first making private robocars for their traditional customers.

In this world, what does it cost to operate these cars? How much might competitive services charge for rides? How much money will they make? What factors, including price, will they compete on, and how will that alter the landscape?

Here are some basic models of cost. I compare a low-cost 1-2 person robotaxi, a higher-end 1-2 person robotaxi, a 4-person traditional sedan robotaxi and the costs of ownership for a private car, the Toyota Prius 2, as calculated by Edmunds. An important difference is that the taxis are forecast to drive 50,000 miles/year (as taxis do) and wear out fully in 5 years. The private car is forecast to drive 15,000 miles/year (higher than the average for new cars, which is 12,000) and to have many years and miles of life left in it. As such the taxis are fully depreciated in this 5 year timeline, and the private car only partly.

Some numbers are speculative. I am predicting that the robotaxis will have an insurance cost well below today's cars, which cost about 6 cents/mile for liability insurance. The taxis will actually be self-insured, meaning this is the expected cost of any incidents. In the early days, this will not be true -- the taxis will be safer, but the incidents will cost more until things settle down. As such the insurance prices are for the future. This is a model of an early maturing market where the volume of robotaxis is fairly high (they are made in the low millions) and the safety record is well established. It's a world where battery prices and reliability have improved. It's a world where there is still a parking glut, before most surplus parking is converted to other purposes.

Fuel is electric for the taxis, gasoline/hybrid for the Prius. The light vehicle is very efficient.

Maintenance is also speculative. Today's cars spend about 6 cents/mile, including 1 cent/mile for the tires. Electric cars are expected to have lower maintenance costs, but the totals here are higher because the car is going 250,000 miles not 75,000 miles like the Prius. With this high level of maintenance and such smooth driving, I forecast low repair cost.

Parking is cheaper for the taxis for several reasons. First, they can freely move around looking for the cheapest place to wait, which will often be free city parking, or the cheapest advertised parking on the auction "spot" market. They do not need to park right where the passenger is going, as the private car does. They will park valet style, and so the small cars will use less space and pay less too. Parking may actually be much cheaper than this, even free in many cases. Of course, many private car owners do not pay for parking overtly, so this varies a lot from city to city.

(You can view the spreadsheet directly on Google docs and download it to your own tool to play around with the model. Adjust my assumptions and report your own price estimates.)

The Prius has one of the lowest costs of ownership of any regular car (take out the parking and it's only 38 cents/mile) but its price is massively undercut by the electric robotaxi, especially my estimates for the half-width electric city car. (I have not even included the tax credits that apply to electric cars today.) For the taxis I add 15% vacant miles to come up with the final cost.

The price of the Prius is the retail cost (on which you must also pay tax) but a taxi fleet operator would pay a wholesale, or even manufacturer's cost. Of course, they now have the costs of running a fleet of self-driving cars. That includes all the virtual stuff (software, maps and apps) with web sites and all the other staff of a big service company ranging from lawyers to marketing departments. This is hard to estimate because if the company gets big, this cost will not be based on miles, and even so, it will not add many cents per mile. The costs of the Prius for fuel, repair, maintenance and the rest are also all retail. The taxi operator wants a margin, and a big margin at first, though with competition this margin would settle to that of other service businesses.

Topic: 

Museums in ruins and old buildings will take on new life with Augmented Reality

We're on the cusp of a new wave of virtual reality and augmented reality technology. The most exciting is probably the Magic Leap. I have yet to look through it, but friends who have describe it as hard to tell from actual physical objects in your environment. The Hololens (which I have looked through) is not that good, and has a very limited field of view, but it already shows good potential.

Tags: 

Actual success in laws to reduce corruption and money in politics

At this week's Singularity U Global Summit, I got a chance to meet with Josh Silver and learn about his organization, represent.us. I have written often in My New Democracy Category on ways to attack the corruption and money in politics. Represent.us is making a push for the use of laws to fix some of these issues, through ballot propositions.

Uber buys Otto, folks leave Google, Ford goes big, Tesla dumps MobilEye

The past period has seen some very big robocar news. Real news, not the constant "X is partnering with Y" press releases that fill the airwaves some times.

Uber has made a deal to purchase Otto, a self-driving truck company I wrote about earlier founded by several friends of mine from Google. The rumoured terms of the deal as astronomical -- possibly 1% of Uber's highly valued stock (which means almost $700M) and other performance rewards. I have no other information yet on the terms, but it's safe to say Otto was just getting started with ambitious goals and would not have sold for less than an impressive amount. For a company only 6 months old, the rumoured terms surpass even the amazing valuation stories of Cruise and Zoox.

While Otto has been working on self-driving technology for trucks, any such technology can also move into cars. Uber already has an active lab in Pittsburgh, but up to now has not been involved in long haul trucking. (It does do local deliveries in some places.) There are many startups out there calling themselves the "Uber for Trucks" and Otto has revealed it was also working on shipping management platform tools, so this will strike some fear into those startups. Because of my friendship with Otto's team, I will do more commentary when more details become public.

In other Uber news, Uber has announced it will sell randomly assigned Uber rides in their self-driving vehicles in Pittsburgh. If your ride request is picked at random (and because it's in the right place) Uber will send one of their own cars to drive you on your ride, and will make the ride free, to boot. Of course, there will be an Uber safety driver in the vehicle monitoring it and ready to take over in any problem or complex situation. So the rides are a gimmick to some extent, but if they were not free, it would be a sign of another way to get customers to pay for the cost of testing and verifying self-driving cars. The free rides, however, will probably actually cause more people to take Uber rides hoping they will win the lottery and get not simply the free ride but the self-driving ride.

GM announced a similar program for Lyft -- but not until next year.

Ford also goes all-in, but with a later date

Ford has announced it wants to commit to making unmanned capable taxi vehicles, the same thing Uber, Google, Cruise/GM, Zoox and most non-car companies want to make. For many years I have outlined the difference between the usual car company approaches, which are evolutionary and involve taking cars and improving their computers and the approaches of the non-car companies which bypass all legacy thinking (mostly around ADAS) to go directly to the final target. I call that "taking a computer and putting wheels on it." It's a big and bold move for Ford to switch to the other camp, and a good sign for them. They have said they will have a fleet of such vehicles as soon as 2021.

Topic: 

Actually, 50 different state regulations is not that bad an idea

At the recent AUVSI/TRB conference in San Francisco, there was much talk of upcoming regulation, particularly from NHTSA. Secretary of Transportation Foxx and his NHTSA staff spoke with just vague hints about what might come in the proposals due this fall. Generally, they said good things, namely that they are wary of slowing down the development of the technology. But they said things that suggest other directions.

Topic: 

Will Robocars be heaven or hell for our cities?

Today, Robin Chase wrote an article wondering if robocars will improve or ruin our cities and asked for my comment on it. It's a long article, and I have lots of comment, since I have been considering these issues for a while. On this site, I spend most of my time on the potential positive future, though I have written various articles on downsides and there are yet more to write about.

Topic: 

Platoon, or just carpool?

At the recent AUVSI/TRB symposium, a popular research topic was platooning for robocars and trucks. Platooning is perhaps the oldest practical proposal when it comes to car automation because you can have the lead vehicle driven by a human, even a specially trained one, and thus resolve all the problems that come from road situations too complex for software to easily handle.

Topic: 

Don't throw away your vote on a major party -- vote 3rd party and mean something

It's common for people to write that those who vote for a minor party in an election are "throwing away" their vote. Here's a recent article by my friend Clay Shirky declaring there's no such thing as a protest vote and many of the cases are correct, but the core thesis is wrong. Instead, I will argue that outside the swing states, you are throwing away your vote if you vote for a major party candidate.

To be clear, if you are in one of the crucial swing states where the race is close -- and trust me, you know that from the billions of dollars of ad spend in your state, as well as from reading polls -- then you should vote for the least evil of the two party candidates as you judge it. And even in most of the country, (non-swing) you should continue to vote for those if you truly support them. But in a non-swing state, in this election in particular, you have an additional option and an additional power.

Consider here in California, which is very solidly for Clinton. Nate Silver rates it as 99.9% (or higher) to go for Clinton. A vote for Clinton or Trump here is wasted. It adds a miniscule proportion to their totals. Clinton will fetch around 8 million votes. You can do the un-noticed thing of making it 8 million and 1, and you'll bump her federally by an even tinier fraction. Your vote can make no difference to the result (you already know that) and nor will it be noticed in the totals. You're throwing it away, getting an insignificant benefit for its use.

Of course, the 3rd party candidates had no chance of winning California, or the USA. And while they like to talk a pretend bluster about that, they know that. You know that. Their voters know that. 3rd party voters aren't voting to help their candidate win, any more than Trump voters imagine their vote could help him win California, or Clinton voters imagine they could affect her assured victory.

Third party voters, however, will express their support for other idea in the final vote totals. If Jill Stein gets 50,000 votes in California, making it 50,001 doesn't make a huge difference, but it makes 160 times as much difference to her total than a Clinton vote does, or 100x what a Trump vote does. Gary Johnson is doing so well this year (polling about 8% of national popular vote) that his voters won't do quite as much to his total, but still many times more improvement than the major party votes. Clay argues that "nobody is receiving" the message of your vote for a third party, but the truth is, your vote for Clinton in California or Trump in Texas is a message that has even less chance of being received.

A big difference this year is that the press are paying attention to the minor parties. This year, you will see much more press on Johnson's and Stein's totals. It is true that in other years, the TV networks would often ignore those parties. In some case, TV network software is programmed to report only the top two results, and to make the percentages displayed add up to 100%. This is wrong of the networks, but I suspect there is less chance of it happening. Johnson will probably appear in those totals. Web sites and newspapers have generally reported the proper totals.

Does anybody look at these totals for minor candidates? Some don't, but the big constituency for them is others interested in minor parties. People want a tribe. Many people don't want to support something unless they see they are not alone, that others are supporting it. Johnson and Stein's poll numbers are already galvanizing many more votes for them.

This is how third parties arise, and it happens a lot outside the USA. In the USA it has't happened since the Republicans arose in the 1850s, tied to the collapse of the Whigs. Prior to that multiple parties were more common. Of course, there have been several runs at new parties (Perot/Reform, Dixiecrat and American Independent) which did not succeed. But if everybody refuses to actually vote for the 3rd parties they support because it is viewed as a waste, of course no 3rd parties will ever arise. Having a slim chance at that is one of the things to drive 3rd party voters, because that slim chance still means making a bigger difference than a meaningless extra vote for a major party.

This is how most political change happens. Because people see they are not alone. That's how small marches and protests grow into bigger ones until leaders are toppled. It's how small movements within big parties, and whole 3rd parties rise.

Topic: 

A smarter successor to Trump is even scarier, but it's coming

Social media are jam packed with analysis of the rise of Donald Trump these days. Most of us in what we would view as the intellectual and educated community are asking not just why Trump is a success, but as Trevor Noah asked, "Why is this even a contest?" Clinton may not be, as the Democrats claim, the most qualified person ever to run, but she's certainly decently qualified, and Trump is almost the only candidate with no public service experience ever to run. Even his supporters readily agree he's a bit of a buffoon, that he says tons of crazy things, and probably doesn't believe most of the things he says. (The fact that he doesn't actually mean many of the crazy things has become the primary justification of those who support him.)

But it is a contest, and while it looks like Clinton will probably win it is also disturbing to me to note that in polls broken down by race and sex, Trump is actually ahead of Clinton by a decent margin among my two groups -- whites and males. (Polls have been varying a lot in the weeks of the conventions.) Whites and males have their biases and privileges, of course, but they are very large and diverse groups, and again, to the coastal intellectual view, this shouldn't even be a contest. (It's also my view as a foreigner of libertarian leanings and no association with either party.)

The things stacked in favour of the Republican nominee

There have been lots of essays examining the reason for Trump's success. Credible essays have described a swing to nationalism and/or authoritarianism which Trump has exploited. Trump's skill at marketing and memes is real. His appeal to paternalism and strength works well (Lakeoff's "strong father" narrative.) The RNC also identified Hillary Clinton as a likely nominee 2 decades ago, and since then has put major effort into discrediting her, much more time than it's ever had to work on other opponents. And Clinton herself certainly has her flaws and low approval ratings, even within her own party.

It is also important to note that the chosen successor of a Democratic incumbent has never in history defeated the Republican. (In 1856 Buchanan defeated the 1st ever Republican nominee, Fremont, but was Franklin Pierce's opponent at the convention.) This stacks the deck in favour of this year's Republican. Of course, Wilson, Cleveland, Roosevelt the 2nd, Carter and Clinton the 1st all defeated incumbent Republicans, so Democrats are far from impotent.

The specific analysis of this election is interesting, but my concern is about the broader trend I see, a much bigger geopolitical trend arising from technology, globalization, income inequality and redistribution among nations as well as the decline of religion and the classic lifetime middle class career. This big topic will get more analysis in time here. I was particularly interested in this recent article linking globalization and the comparative reduced share for the U.S. middle class. The ascendancy of the secular, western, technological, intellectual capitalist liberal elite is facing an increasing backlash.

Where Trump's support comes from

Trump of course begins, as Clinton does, with a large "base." There is an element of the Republican base that will never tolerate voting for Clinton almost no matter how bad Trump is. There is a similar Democratic contingent. This base has been boosted by that 2 decade anti-Clinton campaign.

Topic: 

Tesla's Master plan -- some expected, some strange

Today I want to look at some implications of Tesla's Master Plan Part Deux which caused some buzz this week. (There was other news of course, including the AUVSI/TRB meeting which I attended and will report on shortly, forecast dates from Volvo, BMW and others, hints from Baidu, Faraday Future and Apple, and more.)

In Musk's blog post he lays out these elements of Tesla's plan

  • Integrating generation and storage (with SolarCity and the PowerWall and your car.)
  • Expand into trucks and minibuses
  • More autonomy in Tesla cars
  • Hiring out your Tesla as a robotaxi when not using it

Except for the first one, all of these are ideas I have covered extensively here. It is good to see an automaker start work in these directions. As such while I will mostly agree with what Tesla is saying, there are a few issues to discuss.

Electric (self-driving) minibus and Trucks

In my article earlier this year on the future of transit I laid out why transit should mostly be done with smaller (van sized) vehicles, taking ad-hoc trips on dynamic paths, rather than the big-vehicle, fixed-route, fixed-schedule approach taken today. The automation is what makes this happen (especially when you add the ability of single person robocars to do first and last miles.) Making the bus electric can make it greener, though making it run full almost all the time is far more important for that.

The same is true for trucks, but both trucks and buses have huge power needs which presents problems for having them be electric. Electric's biggest problem here is the long recharge time, which puts your valuable asset out of service. For trucks, the big win of having a robotruck is that it can drive 24 hours/day, you don't want to take that away by making it electric. This means you want to look into things like battery swap, or perhaps more simply tractor swap. In that case, a truck would pull in to a charging station and disconnect from its trailer, and another tractor that just recharged would grab on and keep it going.

Pages