The economic side of Waymo still makes absolutely no sense to me. Uber, with no heavy capital investment, has been pretty much unprofitable for over a decade. The car companies are low margin. The taxi companies are low margin. Alphabet has like 30% profit margins. Waymo's business proposition is 1) to own a very capital-intensive fleet of bespoke cars with no resale value, 2) employ an extremely expensive team of engineers to develop autonomous driving for them, 3) use this incredible capital investment to try to undercut an industry that is already barely or not at all profitable and earn back their 10s of billions of dollars in investment (and 10s of billions more of costs in the future), one taxi ride at a time.

And that's completely ignoring their issue with surges, as their robot car supply is inherently fixed - they either don't intend to handle surges, or intend to have low utilization of their fleet.

None of it makes sense to me.

The business case of their robotaxi service is simple, they aim for substantially lower costs compared to traditional taxi services and personal car ownership.

The cost per vehicle could get to something like $50k in the long-term, labor costs could get to maybe 2 people per 10 vehicles and utilization would be substantially higher compared to personally-owned cars.

The vehicles are / will be designed to last for a long time, Dolgov used 400k miles in his napkin calculation.

They can charge more because the user experience is better, so not only lower cost per mile but also higher price.

Cost of developing the technology will become negligible with scale, it's a fixed cost.

They're not just competing with other taxi services, but with all types of road transport. It's a technology that has the potential to be used by most people on the planet, daily.

Regarding surges, there are multiple ways to deal with it, for example surge pricing (which would motivate people to use the service when utilization is low) or using free capacity for delivery.

Their unit costs are at least break-even in San Francisco, and this is with their 5th gen vehicle, 6th gen is supposed to be much cheaper.

I am expecting Waymo to launch their own autonomous vehicle with a simplified body, no steering wheel, etc. They can bring down the cost as they scale. Resale value is not something they should be concerned with, it's a specialized transport that can be utilized for a fairly long time.