Are Waymos cheaper than hiring a person?
There is also no reason to compete with Uber/Lyft on price because they are just leaving money on the table. When Waymo first launched, we saw them try to undercut (Waymo was about 20% cheaper than Uber/Lyft) but now it's about 20% more expensive. People are willing to pay extra for Waymo, so why would they charge less?
The margin on each Waymo ride is currently very, very high. I don't expect Waymo to cut prices until real competition arrives.
I looked up the numbers - the estimated Uber/Lyft cost per mile in SF is ~$4.50/mi, and Waymo is trending around $1.40/mi (estimated 2025 number).
Anyway, digging into the Reddit posts which gave your lower-bound number, the reasoning seems very suspect. In particular, the biggest methodological problem is that they use retail price numbers when Waymo is almost certainly getting wholesale prices. So it assumes $110K ($70K for a Jaguar iPace + $40K for sensors and other AV equipment) for the car depreciated over 5 years, but $70K is the retail price for a Jaguar, including dealer markup, distribution, marketing, etc, and when you are buying thousands of them you are almost certainly not paying retail. Likewise, it figured 25c/kwh for electricity, which is retail off-peak PG&E rates, but Google just buys their own solar panels and pays pennies for electricity. The AV equipment figure of $40K was I recall what it cost back in ~2014; the cost of LIDAR has come down dramatically since then and now runs $500-1000/vehicle, so that number should also be suspect. And if vehicle cost is more like $50-60K/year than $110K/year, $7K/year in insurance is way too high. Hell, Google could just self-insure with their $250B in cash, they've got a stronger financial position than every insurer other than Berkshire Hathaway.
I'd bet the true cost per mile is well under $1.
[1] https://www.reddit.com/r/SelfDrivingCars/comments/1oiqerw/ho...
[2] https://www.reddit.com/r/waymo/comments/1il5d5i/unit_costs_p...
Waymo has other costs, such as engineering driverless operation.
Once there are enough trips, the fixed engineering costs are spread across more and more trips, exponentially trending towards zero, driving the cost per trip even lower.
Waymo passed 200 million driverless miles in February. If we optimistically assume they're up to 300 million miles now, and every mile was paid for at $10 per mile, that's $3 billion in revenue since they launched. In that same time, Waymo has gotten $27 billion in funding. Of course they haven't spent anywhere close to that amount, and they are optimizing for faster rollout rather than profitability, but the finances aren't as gleaming as one might expect.
I'm sure Waymo will figure out ways to reduce their costs over time, but right now I think they're charging pretty close to what they need to break even.
What matters most are marginal costs (i.e. how much does it cost for Waymo to add 1 more ride). Looking at marginal costs, Waymo takes in more money than it spends on each ride, so projecting outwards when Waymo operates a large enough fleet, Waymo will be profitable.
Uber/Lyft run enormous fleets of ~2 million vehicles in the US, and that's how they are able to maintain profitability. They can spread their engineering and management expenses over millions of rides.
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Doing my own math, the marginal costs for Waymo are:
Revenue: Each Waymo vehicle brings in ~$50/hour
Expenses: Waymo must pay for
* Assume the cost of a vehicle is $100k
* Amortized depreciation of the car (assume vehicles need to be fully replaced after ~250,000 miles, vehicles average 25 miles / hour, vehicles need to be fully replaced after 10,000 hours, cost is $10/hour)
* Maintenance (Assume the total cost of maintenance is an additional 25% of the vehicle price, vehicle price is $100k and vehicle lasts 10,000 hours, cost is $2.5/hour). This is likely an underestimate, I didn't model the cost of a mechanic, so this could be as high as $5-7/hour.
* Support (assume 1 support agent can support 10 vehicles, Philippine support agent costs $10/hour, so amortized $1/hour per vehicle)
* Cleaning (needed daily, costs $1/hour per vehicle)
* Datacenter compute for vehicle coordination ($0.50/hour per vehicle)
* Electricity (Assume $2/hour)
10 + 2.5 + 1 + 1 + 0.5 + 2 = $17/hour to operate a Waymo.
In conclusion, the marginal costs for Waymo is very profitable.
There are other considerations as well. For example, available ride shares can scale up/down with demand, while Waymo & competitors will need lots of spare vehicles to satisfy peak demand.
I'm certain autonomous vehicles will eat up the market currently held by Uber/Lyft/Taxis. It's just going to take longer than a lot of people expect.
Waymo can expand easily in markets like SF and NYC, where drivers are guaranteed a minimum pay rate of $22+ per hour, but will make less and less economic sense in cheaper labor markets.
Or less depending on how you tip.
Exact same reason why Uber and Lyft were considerably cheaper than taxis in many big cities when they first launched (eg: Lyft in Seattle in 2013/2014), running at a loss, and the pricing has now incrementally grown to become the same as, or even more expensive than traditional meter taxis in some places.
That said, it doesn't really matter if they're cheaper as long as they're comparable.
The cars are newer and nicer (for now), they're almost always cleaner since they can rotating one car out for cleaning doesn't mean the driver is losing earnings, they're better drivers than the average ride-share driver, you don't feel the need to tip, and I've multiple of my friends who are women call out that they feel safer in them because there's no risk of the driver being creepy (or worse).
I don't think Waymo is trying to win on price right now. I think as long as they just stay somewhat competitive on that front the other benefits will continue to draw in customers.
(nobody would confuse me with an economist!)
If we're in a world where human driven Uber's are $30, you're right that Waymo probably won't charge $20 just to be nice, even if it only costs them $10. They might charge $20 though if their data shows that it would 10x the number of riders or if they're also competing with another autonomous taxi company.
The driver cost is of course the big saving. And they need breaks as well and don't drive 24x7. A robo taxi only has down time when there are no rides, or for charging and maintenance/cleaning.
Mostly what Waymo is doing currently with customized vehicles is not actually super scalable. But it helps at their relatively small current scale. You wouldn't design a custom vehicle + factory for their current growth rate. That becomes more interesting when they start scaling beyond tens of thousands of new vehicles per year. They are probably in the lower thousands currently.
I think they raised close to 20-30B so far. They say they are doing 500K rides per week. At 15$ per ride that adds up to ~390M/year. That's revenue, not profit. But if they could 100x that by rolling out to more and more cities and larger and larger areas, it's going to add up to annual revenues that add up to more than what they raised. That's not going to happen overnight, obviously. But they seem on a path where they are scaling, optimizing, reducing their cost, and growing.
The risks here are mainly that they won't have the market to themselves. Others are doing robo taxi's too and if any of them starts scaling faster and cheaper, Waymo could hit some growth issues. Also, with multiple companies competing, prices per ride would eventually go down. The next five years are going to be interesting.
It's wierd to see this fantasy of machines on HN, of all places - that they have no downtime, no additional costs - it's only a savings from employing people), and (not said here) they don't make mistakes.
Lots of machines have far more downtime and cost than people. Many have more maintenance hours than operating hours.
But, a Waymo car has a huge impact compared to gig drivers. Even ones that do it 12 hours a day. The Waymo fleet is maximally available for both rush-hour busy times plus closing time at bars and nightclubs.
I don't know if they've released updated fleet statistics, but in the past I've been shocked at how small it is relative to the visibility and passenger miles. This indicates that downtime isn't a limiting factor.
Gig drivers optimize, or try to, their individual revenue and other preferences the shape their responsiveness to customer demand. In other words it's two sided market among individuals. Waymo isn't. Waymo optimizes across their whole fleet for revenue, presumably, and customer satisfaction.
What makes you say that there is a difference, the difference is in Waymo's favor, or that it's so large?
Rideshare drivers also know about rush hour and closing time, and rideshare companies adjust availability for those times. There's no reason to think Waymo will handle it's inventory of rides better than Uber.
> Gig drivers optimize, or try to, their individual revenue and other preferences the shape their responsiveness to customer demand. In other words it's two sided market among individuals. Waymo isn't. Waymo optimizes across their whole fleet for revenue, presumably, and customer satisfaction.
That is really a bizarre notion. Why would Waymo's interests be any more aligned with customers than rideshare drivers? Waymo cars are robots operated by a corporation in another state or country. Rideshare drivers are human beings in the same car, who live in the same city or town.
Gig drivers have range of needs and preferences. Waymo, same algorithm, same car, same user experience all the time. Forums like HN also tends to have a blind spot about consumer preferences of women. These and other reasons are why Waymo has an outsize impact on a market compared to fleet size.
Again, the premise seems to be the fantasy that computers are objective, autonomous gods that don't have biases or errors, none of which is true. And again, it's bizarre to encounter that on HN of all places.
It's a very dangerous fantasy that sacrifices individual, rational thought and places all power in the hands of those who control the computers, like a cult.