The thing is these rideshare companies: Lyft, Uber, Ola, Grab and Didi Mechagodzilla Chuxing, these companies all exploded out of nothing, they're all so young.

The software they run on is complex, but not so complex that it can't be replicated.

So if you're a company with the secret sauce, that being a validated autonomous OS, you would most definitely want to run the consumer facing end of the business yourself, because that's where the real profit margins are hiding. Back-end software, fleet maintenance, and harware: this stuff is all eventually going to become commoditized. Customer experience will be the differentiator.

A thing to keep in mind is that a fleet of sensor riddled robotaxis will gather far more granular data about the world than just a standard human driven taxi, so the potential is there to take fleet management logistics to another level that no conventional rideshare can hope to compete with.

Really, if you let your imagination run wild with what can be done with that kind of data about the world, well, oh my gosh. You're building a live action parallel universe made out of networked lidars and running annotated data through pattern recognizers.

The privacy implications would make the hairs on your back stand-up if conceptualizing the astronomical amount of data that's going to kicked around hasn't already made you dizzy. It varies from company to company, but a typical test vehicle gobbles up something in the neighbourhood of 4 terabytes a day. In the future that number will go up. Thousands and thousands of Robotaxis.

The evidence for the real profit margins being in the customer facing bit isn't strongly supported by the current market being so competitive that the companies run at VC-subsidised operating losses in most markets whilst fighting endless legal battles. If the secret sauce that changes all that is the self driving tech, the profit remains all in that. Ride locating software is relatively straightforward for a company with Alphabet's resources to develop, the business side less so, especially when its core businesses are notoriously poor at customer service and making far too much money from an existing search near-monopoly to want to risk attracting complaints about anti-competitive behaviour in new markets. And they could still can collect all that juicy data if other entities paid them enormous licence fees to run the consumer facing bit of an autonomous vehicle operation, maintain the vehicles, obtain permits in 1001 jurisdictions and design cars and ownership models to consumer preferences

Unique, regulated and highly complex software and hardware components seems far less likely to become commoditized than ridesharing apps that essentially already are, and of course viable markets for the driving tech exists even if the driver can't be dispensed with altogether.

If they're serious they'll just buy Lyft. That's probably Lyft's strategy. Get Instagramed/WhatsApped.

I agree those other factors are complex and challenging to develop, particularly for Waymo which has the additional challenge of delivering self-driving tech that works.

But Lyft (and Uber for that matter...) doesn't really have those capabilities today anyway, at least to the extent they will be needed for autonomous fleets. They have blunt tools for supply and demand management, but drivers take on much of the risk in terms of positioning, routing, and deciding whether or not to get on the road in the first place. If Waymo owns their fleet, will they let Lyft have complete control over their assets without some balance or at the very least data to make sure the vehicles are being used efficiently? And if Waymo learns enough about scheduling, routing, etc. to make sure Lyft is using the vehicles efficiently, how much harder is it for Waymo to just run the vehicles efficiently themselves and capture the value of owning a direct relationship with the end rider?

> there's a lot of other factors to work out like scheduling, routing, supply-demand management, optimal vehicle distribution, pooling etc

These things come along the way. If there is a service that's 10x cheaper than Lyft, I could imagine most people would churn to that service. The technology shift from human to completely autonomous driving is so huge that it could just disrupt the current market structure.

>If there is a service that's 10x cheaper

Why would a ride service based on autonomous cars be 10x cheaper? It's not like 90% of the current revenue or costs are human labor. I'm not sure the exact ratio of driver labor vs. gas/maintenance/depreciation, but I'm pretty sure it's less than 10:1.

I haven't personally done the math but my understanding is that the current (possibly subsidized) rate for Lyft/Uber is in the $1.00 to $1.50 per mile range. The IRS rate for car usage is about $0.53/mile.

Presumably the cost for a heavily utilized vehicle is going to be lower per mile. OTOH, any commercial fleet service is going to have costs on top of the base mileage cost. (The $0.53 figure also ignores any distance the vehicle might have to travel to pick you up.)

So it's probably reasonable as a back-of-the-envelope swag to assume that, if a fully autonomous vehicle were available today, you could probably undercut a "ridesharing" service by about 50%. It's definitely not suddenly going to be almost too cheap to meter just because you take the driver out of the equation.

I think it could eventually be much cheaper but I don't know about 10:1.

If autonomous cars don't crash, the insurance will be super cheap. If they are electric, then maintenance and operating costs should be very inexpensive.

When cars don't crash, they don't need to be designed to crash, so you can start building the cars out of lighter materials. When the car is far lighter, then the drivetrain can be simpler and energy consumption should be less.

I could see taxis serving city centers that are more like a golf cart than a Crown Vic. So the cars should be cheaper to buy or lease as well.

Some of the same technology that's needed for autonomous driving could be applied to the maintenance and repair side as well. So when the cars do break, I think they could be repaired inexpensively by other robots.

I can imagine all the people involved in the taxi industry being replaced by taxi.py.

All you need next is to build A near B and you can take the person out of the car entirely. They can walk to their destination, and the car can be made out of aerogel and powered by fairy dust and the ride sharing software is simpler, the logistics are easier to manage, wear and tear is reduced, and the companies can have a valuation into the stratosphere.

> I could see taxis serving city centers that are more like a golf cart than a Crown Vic.

http://www.tqsmagazine.co.uk/wp-content/uploads/2013/02/john...

> All you need next is to build A near B

That will never happen. When my car can drive itself, I'm moving further out of the city.

Maybe you'll do that, but the net effect would still be a greater migration into the city, because people would be able to have all the benefits of urban living and all the benefits of car mobility, without having to cover the high monthly cost of a downtown parking space.

Just leave your car parked out in the suburbs somewhere, program it to move to another parking space at least once every 72 hours so it doesn't get towed, then call it to come in and pick you up whenever you want to use it.

"Difficult to see. Always in motion is the future."

>When cars don't crash, they don't need to be designed to crash

No matter how good Waymo's driving is, unless they're the only things on the road, their cars will need to be collision-safe.

Using china as an example, taxis (and Uber equivalents) are much cheaper there to use than the USA while non labor costs (gas and cars) are actually more expensive than in the states. So I would guess labor is a large part of the cost, or it doesn’t really make sense. Maybe not 10x cheaper, but half as much is probably reasonable.

50% of rideshare rates with a driver seems like a very reasonable ballpark. There are reasons it might be somewhat more or less but it's probably pretty close. Which means you probably change car ownership outside of dense areas where it's already marginal a lot less than many assume. I might use my own car less at those rates but I'd absolutely still own one for a variety of reasons.

In china I didn’t own a car, it was about 2X the cost to buy one (for what I wanted() vs. the USA, plus parking was a PITA in a city like Beijing where it was often illegal (parking in the second lane each way of a 4 lane street). In many places, car ownership and use fees are a lot more than the USA, but somehow taxis are very reasonable as alternatives.

Having move back, I now own a car that I have to fill up with gas once every couple of months (I don’t drive it much, but with a baby uber isn’t an option)

In NYC, another large cost is the real-estate to park the vehicle when not in use (~$300/mo). This could presumably be reduced or eliminated as well.

What if you go with small electric cars? Does that cut the cost further?

Electric and small/utilitarian vehicle economics can apply equally well to a car you own or a rideshare service with a driver.

You can run a car for longer with no driver and of course the human capital involved is none. But the flip side is that the cars wear out quickly.

A lot of taxis are already run 24 hours a day, switching off between drivers at shift changes. The per-mile gas, maintenance, and depreciation (ignoring any fixed per-day or per-year costs) are already much more than 10% of the total cost of a ride.

I came across a (possibly outdated) Uber pricing model for LA of a $5.60 minimum fare and a $0.90 per mile charge, and among other fees, NYC cabs are $2.50 per mile. Compare both of those numbers to the IRS mileage rate of $0.53 per mile to get a very rough lower bound on some of the costs.

The fare for NYC is incorrect -- $2.50 is the base price and $0.505/mile and $0.50/minute the car is stopped (i.e. in traffic if they're waiting). There's also a $1 surchage between 4-8pm on the weekdays.

http://www.nyc.gov/html/tlc/html/passenger/taxicab_rate.shtm...

>$2.50 is the base price and $0.505/mile and $0.50/minute the car is stopped

Sorry, I was going off "Plus 50 cents per 1/5 mile" to mean $2.50 per mile. Where are you getting $0.505/mile from your link?

Lol I read that completely wrong. Time for more coffee, I suppose -- that definitely means $2.50/mile.

Also I feel like these are all things Google is already really good at. They already do most of these with Maps/Waze.

Also, the challenges involved in "scheduling, routing, supply-demand management, optimal vehicle distribution, pooling" are far easier to replicate than self-driving capabilities. Don't think this'll be a huge challenge for Google to do themselves.

Google already has a smaller ride sharing service with Waze. It differs from Lyft and Uber in that passengers only cover gas costs.

https://www.waze.com/carpool/

Yeah, I think Waymo is much better off selling shovels to prospectors than trying to mine all the gold themselves. A lot of people will try to get into the ridesharing business, some of them much better capitalized than Waymo.

Better capatilized than Waymo? Alphabet has over $100b cash with less than $4b debt and over 40% on shore.

Only Apple has more with about $260b cash but over $100b debt and over 90% offshore so tax liability yet to be paid.

What better capitalization are you speaking? Also realize Alphabet could also raise additional capital bpver easily. They are the only ones truly able to so level 4 and they are miles and miles ahead of everyone else literally.

https://www.wired.com/2017/02/california-dmv-autonomous-car-... The Numbers Don't Lie: Self-Driving Cars Are Getting Good - Wired

Sorry, excellent point. For some reason I was thinking of Waymo as independent, even though I know that's not the case.

Seriously, if Google wanted to actually build it's Waymo car, it could just buy Chrysler, probably in cash for ~$8-15B. It doesn't need anyone... then again, I get a sense that they have no interest in getting into that market due to the lower margins.