Who Owns the Future of Autonomous Mobility?
By: Georg Polzer
Tags: Autonomous Cars, Mobility, Public Transit

Autonomous shuttles being tested by the Berlin Transit Authority (BVG)

I see fundamentally two different scenarios for how autonomous mobility will become available in our cities:

As a privately operated service, as currently being tested by Waymo or Uber. As a publicly mandated service, provided by the local public transit operator, e.g. MTA or TfL via service providers such as Keolis, Transdev or ViaVan.

Why does the answer to the question of who will operate autonomous fleets matter? Because a ton of money is currently being poured into the development of autonomous fleets and the ROI on this money depends on whether there is a chance to build a hopefully profitable business by autonomously shuttling people from A to B.

In scenario 1, we would have a small number of private fleet operators per city offering autonomous rides, very similar to the service currently being tested by Waymo or Uber.

Pro: 99% of the time, private sector services are of higher quality, more innovative and offer better customer service thanks to strong competition.

99% of the time, private sector services are of higher quality, more innovative and offer better customer service thanks to strong competition. Con: Private operation of an autonomous fleet could have a strongly negative impact on public transit usage and its revenue — especially if combined with aggressive pricing via VC-funded subsidies.

Private operation of an autonomous fleet could have a strongly negative impact on public transit usage and its revenue — especially if combined with aggressive pricing via VC-funded subsidies. Reasons to believe that scenario 1 becomes true: First, especially in the first decade of autonomous mobility being available, the operation of autonomous fleets will require deep expertise and only private entities at the forefront of developing autonomous cars will have such expertise. Second, in case the intellectual property / patents around autonomous driving end up in the hands of very few players such as Waymo, it might enable Waymo et al to strongly push for privately owned and operated autonomous shuttle services. It would also prevent players like Keolis, Transdev or ViaVan to offer competitive services to public transit agencies (scenario 2).

In scenario 2, we would see a model in which a private service providers such as Keolis, Transdev or ViaVan operate the autonomous fleets in the name of the public transit agency. Today, companies like Keolis operate bus and tram lines as a service to public transit agencies and they would do the same for autonomous shuttle fleets.

Pro: Autonomous mobility would be embedded seamlessly into the existing public transit infrastructure, both in terms of pricing/ticketing but also in terms of schedules and first/last mile connectivity. Thanks to public subsidies the service would be available and affordable for many citizens.

Autonomous mobility would be embedded seamlessly into the existing public transit infrastructure, both in terms of pricing/ticketing but also in terms of schedules and first/last mile connectivity. Thanks to public subsidies the service would be available and affordable for many citizens. Con: Operating public transit services as a service provider to a public transit agency is a low margin business and might not provide the necessary returns for continued investment into developing autonomous technology further (or at least not on the levels currently taking place).

Operating public transit services as a service provider to a public transit agency is a low margin business and might not provide the necessary returns for continued investment into developing autonomous technology further (or at least not on the levels currently taking place). Reasons to believe that scenario 2 becomes true: First, there are doubts that autonomous ridesharing services will ever be a profitable business. Therefore in the mid- to long-term (after VC money flow into the sector has dried up), autonomous fleets might require public subsidies the same way subways or buses do. Second, autonomous fleets will likely capture a lot of trips that otherwise would have taken place on public transit, resulting in revenue shortfall on the public transit agency side. This will incentivize the public transit agency to take control and offer the service themselves (see e.g. a position paper in that direction by the German association of transit agencies). Third – while Uber and Waymo would never consider doing that – companies like Keolis or Transdev are ready to serve public transit agencies with autonomous fleets as service providers. While a public transit agency might not have the sophistication to operate an autonomous ride-hailing service, Keolis / Transdev might. Offered with that choice, cities might simply ban private operators in favor of services that are mandated by / subcontracted to the cities. Fourth, autonomous mobility will likely start as Level 4 (completely autonomous within well constrained environment, e.g. separate protected lanes) which requires policy changes by the cities, providing them leverage to push for a model that is strongly controlled by the cities / transit agencies.

It will be interesting to see how the next 10 years (hopefully less) unfold until the first “robo taxis” roam our streets. If you asked me for a bet today, I would put my money on scenario 2 with privately-held service providers operating autonomous shuttles under strong supervision by the public transit agency. This is definitely not the scenario companies currently innovating along the autonomous driving value chain are hoping for.