Autonomous cars: How to build your fleet (while minimizing your investment)
By: Bertrand Duflos
Tags: Self Driving Cars, Autonomous Vehicle Market, Transportation

Autonomous cars: How to build your fleet (while minimizing your investment)

Waymo has just opened its small-scale robotaxi service in Phoenix Arizona. GM is about to start testing fully driverless cars in San Francisco. Motional might well do the same within a few months in Las Vegas.

If everything goes well, the next step might well be how to turn these tests into real businesses. One of the main difficulties will then be to finance the fleet, at minimum risk, while keeping full control.

In this respect, Tesla has already a long time ago explained its strategy (it might finally have another plan, though).

Tesla has sold a very large number of cars to its customers. Many of these cars are, at least in principle, self-driving ready.

When full self-driving on Teslas will be available ( which hypothetically might be a matter of months), Tesla has planned then to propose to its customers to turn their cars into robotaxis. Tesla would include them into its fleet of robotaxis, ‘the Tesla network’: The cars would then produce revenues for their owners. And for Tesla.

A very attractive promise of course for Tesla buyers.

Now, on December 4th, during the ‘Future of the car’conference organised by the Financial Times, John Krafcic Waymo’s CEO mentioned that Waymo envisages a similar business model for its fleet of self-driving cars.

More specifically, John Krafcic explained that Waymo is assessing a business model in which customers could subscribe to a fully automated car (having the ‘Waymo driver‘) for a period of 6 or 12 months and could, after that period, stop the subscription.

This first period would make it possible to amortize part of the car.

The car would then be included into the Waymo fleet, in which it would be operated as a robotaxi. Since the mileage that you can expect of such a car can be 300 000, 500 000 or even 1 million miles, amortizing the car and its self-driving system would then be fairly trivial.

Mr Krafcik added that, based on >2$/mile for ride-hailing rides today, the economics of such activity seem quite promising.

Accordingly, although for transporting people, self-driving vehicles will probably be mainly used as shared vehicles (robotaxis, shuttles,..), if this approach becomes reality, we might possibly soon have the possibility to actually buy (or at least to subscribe to) fully autonomous cars.

Selling these cars will be selling much more than a car.

Well, sure, it will often be selling a car.

But in many cases, actually, it will rather be selling a financial product, an investment: It will be selling you the stream of future revenues that you will (possibly) achieve if you invest in that car: “Invest in my car (or my fleet)”, the message will say; “you will make money; more with my car(s) than with any competitor’s”.

And this is how the race to build robotaxi fleets at scale will go.

It is our choice now to let or not this race go on unregulated. We can conversely adopt rules (in particular, road usage charge) in order to preserve our public transit, our public space, our cities.