Self-Driving Cars Could End Uber

But I don't think this will be an option. I think we all know cars are extremely inefficient, but we fail to see the magnitude of that inefficiency. They are outrageously, extremely, mind-bogglingly inefficient. To the point that, once they start to become more efficient thanks to self-driving, owning your own car will be extremely rare.

The thing with self-driving cars is that it really alters the whole economic landscape of car transportation. You don't need two cars in your garage because the same car can take your kids to school and you and your spouse to work.

But keep that idea scaling. Your whole neighborhood could probably get around with less that one self driving car per house. So you'll start seeing neighborhood associations or apartment buildings pooling resources to buy 20 or 30 cars for the whole community to use.

Scale even further. The same could be said for a city. You could just have a fleet of 1000 cars, paid and maintained by the local government with taxes, that move people around with maximum efficiency.

It's not that Uber has a tough future ahead. All car companies that rely in selling cars in volume will also face pressure. There will be a lot of concentration, a lot of mergers and a lot of bankruptcies, because we are going to a market that will be 1/10th the size of what it is now.

(As the top reply notes, it's not quite as lucrative as you might suggest: the fares will drop precipitously once SDCs are out. Once you factor out the inconvenience and overhead, it will probably defray some of TCO but not by much.)

The money quote is here:

> But even if Uber can keep up in terms of autonomous vehicle technology—or find more willing partners in the established auto industry—there’s a much larger problem looming ahead.

> The companies that will profit from the transportation-as-a-service revolution will depend on an incredibly costly infrastructure—one that doesn’t yet exist. Someone has to buy and maintain all the autonomous vehicles, enough to replace all of the cars driven (and usually owned) by Uber and Lyft drivers, not to mention many of the cars driven by you, me and countless others, too.

> To date, Uber’s model has been built on it not owning vehicles. Owning an enormous fleet of them, which might be required to make transportation-as-a-service work, is in some ways antithetical to the business model that has given Uber a nearly $70 billion valuation, more than any other startup. That model depends on outsourcing vehicle ownership and maintenance to its drivers.

> Uber does own its prototype self-driving vehicles, but declined to comment on the extent to which its future would depend on owning vehicles.

> Auto manufacturers have a great deal of experience working with the complex web of dealers, financing companies and fleet managers—even car-rental agencies—that could potentially be repurposed to manage millions of self-driving vehicles.

More generally, the cost of ownership per mile is only around 10 cents. So a driverless car with a utilization of 85% and an average speed of 60mph (high estimates) would need to charge $120 per day to break even. For 1200 miles of driving and 20 hours of travel time, which is far more than a single driver with a rented car would travel. That's $6 per hour. And gas accounts for 95% of that, so if we go electric the costs are even lower.

With taxis, the overwhelming majority of the cost is the driver's wage. Which is way more of an issue in rural areas where they aren't getting paid once they drop the fare off. Without a driver to pay, low density demand is far less of an issue because you may have to bear the cost of getting the car to the next fare, but that's going to be a function of distance traveled rather than time.

That makes no sense. The costs of maintaining the car don't magically disappear because the driver pays them. They're paid from ride fares one way or another.

Source: http://www.olino.org/us/articles/2009/02/17/costs-of-the-ele...

I personally don't see it. Uber has already begun being disintermediated. For example, ride-sharing is already an option in Apple Maps on iOS where Uber sits alongside Lyft and any other ride-hailing apps on your phone, price comparison and all. You can also hail a ride with Siri. As a rider, why would I care whether my ride is dispatched by Uber or Lyft? I only care about availability and price. At some point in the future, I probably won't even need to install a competitor's app on my phone; I'll ask Apple Maps or Siri to get me a ride and it will dispatch a car from whichever service is faster and/or cheaper.

Uber has a plausible route to winner-take-all dominance as long as ride-hailing remains a two-sided market, where competitors have a chicken-and-egg problem in recruiting drivers and riders. But self-driving changes the game.

But Uber is in 400-something cities worldwide, it'll be a long time before Robotaxis reach market saturation everywhere, it'll require millions of autonomous fleet vehicles to do that. One advantage that Uber has over a traditional automaker entering the space is that Uber can, at the outset, use autonomous vehicles to augment human driven networks. If a company such as Ford, say, cannot provide enough robotaxis to meet demand in a given locale, then their network won't be reliable and it'll just piss off customers. Uber won't have that problem, their network of human drivers will always be able to fill in gaps in service.

A lot would have to go wrong for Uber to be displaced entirely. We can only guess as to what the demand for autonomous rideshare will ultimately be, but it could easily be 10x, or even 100x what the demand for conventional rideshare ever was.

Although even amongst rideshare companies, both Lyft and Didi are looking more interesting. Didi has secured $5 billion in new capital and will likely be making some high profile AV start-up acquisitions out of their Silicon Valley office soon, and will be partnering with some Chines automaker to bring robotaxis to Asia. Lyft has a secure partnership with GM, the most exciting developer of L4 out there at the moment, given that Cruis automation is making dramatic progress using the Chevy Bolt platform, the first long range mass-market electric vehicle to go into production.

For existing houses people will use them as storage space, or convert them to an additional room, or just ignore them.

New houses will be built without them. And, maybe more interestingly, without driveways..

Welcome to the rest of the World, America. You know, that part of the World that's actually way bigger than America.