SmartDrivingCar.com/11.32-WrongMarket-08/21/23
31st edition of the 11th year of SmartDrivingCars eLetter
B. Wang, Aug. 15, “GM’s Cruise robotaxi service has expanded from 70 to 300 robotaxis operating in San Francisco and will soon expand to Phoenix, Los Angeles, Austin and Dubai. GM Cruise had increasing losses of $561 million in the first quarter of 2023. This will be over $2 billion in losses in 2023. GM Cruise will having increasing billions in net losses until they reach profitable scale. IF GM Cruise grows revenue by 1000 to 2000 times (100,000% to 200,000%) by 2030 and achieves operational and financial efficiency then it would become very profitable. Robotaxi’s must continue to undercut Uber, taxi and public transit pricing to get the market share. This will take perhaps $100 billion or much more cumulative losses to finally reach profitability.
Waymo financials is in Google Other Bets and were a lot of the Other Bet losses of $4.8 billion in 2020 and $5.2 billion in 2021 and $6B in 2022. Morgan Stanley analysts valued Waymo at $175 billion in 2018, $105 billion in Sept 2019 and the Waymo valuation estimate in 2023 is $30 billion….” Read more Hmmmm… All the more reason that focusing on serving the folks whom Uber/Lyft serve amounts to chasing the wrong customers. Those customers are simply too diffuse spatially and too needy to justify their high price. Being marginally cheaper (~20% discount) isn’t sufficiently disruptive to expand this customer base and is inconsequential to the bulk of valued ride-hailing customers – those taking longer trips who tip well. Even if Cruise & Waymo got’em all, the financials aren’t pretty. Too few, too needy to end up contributing anywhere near enough to have any hope for profit, even after bankruptcy, let alone an RoI on the initial investment.
Proof-of-market only makes sense when the fundamental advantages of driverless’ on-demand, spatial land temporal flexibility can be leveraged to offer really good mobility at a very low price within sufficiently concentrated areas to people who need a ride within that concentrated area and are willing to put a little shoe leather into the game.
Such market disruptions happen every day in even not-so-tall buildings. Just think: if getting around in tall buildings required a “ride-hailing” service model, we would have no tall buildings. You’d need an app, an elevator operator, a rating system, layers of public oversight, … but, you could go directly from the front door to your room… maybe??? No reason why the elevator service (easily accessible pick up and drop off, on-demand 24/7, casual rid-sharing attendant/driver-free service) model can’t be enormously disruptive in attracting the loyalty of the vast number of people who need a ride and, also, to the many who find themselves forced into giving themselves a ride and even some who can readily give themselves a ride.
In case I haven’t been clear, the ride-haling service model is not a sufficiently disruptive business model to afford the investment that driverless requires. Had it been easy to do driverless and the Elaine Herzberg crash had not occurred, then maybe Uber/Lyft would be financial darlings. Unfortunately, driverless has proven to be really tough and Uber/Lyft are but taxis with a really nice app, but are forever burdened with providing a living wage to an individual who services but one rider at a time, not only for that ride, but also the time waiting around for that rider and the time getting to that rider. The driver has very little opportunity to be more productive, since, apparently, ride-sharing destroys ride-hailing’s service concept to an extent that is greater than can be restored by a cheaper price to the valued ride-hailing customers. Thus, no ride sharing, Moreover, the non-constant demand throughout the day induces a substantial amount dead time further challenging driver productivity. Thus, as with taxis and limos, Under/Lyft ride hailing can’t be less substantially less expensive than taxis/limos and given the expected returns and life-styles of the Silicon Valley inventors of ride-hailing it is not the right disruptive business model for driverless. The elevator business model of making it easy for anyone to get a ride any time from and to many places, with or without others, no app required and is such a good way to go that those benefiting from that equitable accessibility might be willing to pitch in an make it even free because in the end it is so inexpensive to deliver. Now that’s disruptive!
If you want to learn more about the wrong business model for driverless, see Brian being interviewed in Tesla Expert: Why Cruise and Waymo Will Go Bankrupt Alain
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SmartDrivingCars ZoomCast 331 / PodCast 331 Wrong Market
F. Fishkin, Aug. 21, Following a crash with an emergency vehicle and a request from the California Department of Motor Vehicles, GM Cruise cuts San Francisco robotaxi fleet in half. What Princeton’s Alain Kornhauser suggests they should do next, plus Cruise losses, automated vehicle legal issues, Tesla and more. Tune in to Alain and co-host Fred Fishkin for the latest.
0:00 open
0:24 Next Big Future piece on apparent 2 billion dollar GM Cruise loss this year
9:20 Cruise agrees to cut robotaxi fleet in half in San Francisco. Alain says should end service there to focus elsewhere
17:00 Alain’s response to those who point to the robotaxi collision with an emergency vehicle
20:00 The Verge has a report headlined Robotaxis are Driving on Thin Ice
22:00 GM Authority says Cruise is now testing in Charlotte
28:00 A diversion onto The Dinky
33:11 Juris report spotlighting potential criminal liability for operation of automated vehicles
36:27 Tip of the hat once again to Tesla Daily
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S. Rumpf-Whitten. Aug. 19, “…On Friday, the California Department of Motor Vehicles (DMV) asked Cruise to halve the number of vehicles it was operating in San Francisco.
“The DMV is in contact with Cruise and law enforcement officials to determine the facts and requested Cruise to immediately reduce its active fleet of operating vehicles by 50% until the investigation is complete and Cruise takes appropriate corrective actions to improve road safety,” the California DMV said in a statement to Fox News Digital….
In a statement, Cruise admitted to the “complexity to this specific incident,” saying that the AV positively identified the emergency vehicle “almost immediately.” ….” Read more Hmmmm… Enormously unfortunate.
By the way, what ever happened to having emergency vehicles under “code 3” be able to pre-empt traffic signals so that they have nothing but green lights ahead? Is CaDMV going to intervene with those who stood in the way of that implementation? Talk about something that is “easy” for Silicon Valley technologists… As soon as an emergency vehicle gets requested, even before it leaves its domicile, it knows where it is, where it’s going, and the best route it should take to get there. It is therefore trivial for it to anticipate which intersections are ahead and when it expects to arrive at each intersection. Further, the technology exists that can readily engage the signal at each intersection, ensuring that the emergency vehicle has plenty of green, and there is plenty of red to ensure that no alert, well-behaving driver will enter in the intersection until after the passage of the emergency vehicle. Is it really possible that such a tech savvy city such as San Francisco hasn’t implemented, a long time ago, such a public safety system? And might we also examine additional potential and reasonable scenarios in which law-abiding, human drivers might come to harm for obeying traffic signals? C’mon San Francisco! . Alain
‘This Experience May Feel Futuristic’: Three Rides in Waymo Robot Taxis
T. Mickie, Aug 21, “ “Hello, Tripp,” a disembodied woman’s voice said through the speakers of a driverless taxi that was about to pick up a fare near the colorful Victorian houses known as the Painted Ladies.
“This experience may feel futuristic,” the voice said. “Please don’t touch the steering wheel or pedals during the ride. For any questions, you can find information in the Waymo app, like how we keep our cars safe or clean.”
For several years, San Francisco’s hilly and congested streets have doubled as a test track for hundreds of driverless cars operated by Waymo, an autonomous vehicle company owned by the Google parent company Alphabet, and General Motors-owned Cruise…. “ Read more Hmmmm… Further confirmation that San Francisco has provided the venue for Waymo (and Cruise) do pass with flying colors its “proof-of-concept” It is doubtful that 3 random Limo/taxi/Uber/Lyft would have been better. I still contend that ride-hailing is not the right business model, but that’s another story. The important one here is that Waymo (and Cruise) actually work “out-of-the-box” without a driver or attendant while taking appropriate precautions. As far as I know, they are the only ones that have demonstrated that capability is a challenging ODD. Congratulations!
It is also my understanding from one of my former students that Waymo is charging a 20% premium over Uber/Lyft in Phoenix and getting it. So, the ride-hailing model is working for at least some who have the aversion to “having a stranger give them a ride”, a perception that was expressed repeatedly during the CPUC public comment period 10 days ago. The challenge is: are there enough of these kinds of customers to deliver any kind of RoI. If the original investment is written off as sunk, then maybe. But, I contend, that the really huge opportunity is to earn 75% less on >20x personTrips and 80% less on 100x personTrips. That’s disruptive scale that can deliver side benefits that amplify these earnings. Alain
Tesla Added to “Best Ideas” List, Cybertruck/Highland Updates, Malaysia Comments
Rob Mauer, Aug. 21, “➤ Tesla stock has best day in months after being added to “best ideas” list ➤ Honda announces intent to adopt NACS ➤ Highland updates ➤ Cybertruck filming spotted ➤ India reports ➤ Malaysian Prime Minister comments on Tesla ➤ Tesla adds Siri support ➤ UAW comments ahead of contract ending ➤ Cruise ordered to reduce vehicle operations ➤ Calendar ➤ Tesla Daily turns six….” Read more Hmmmm… Very interesting and informative, as always. Alain
Robotaxis are driving on thin ice
Andre Hawkins, Aug. 16, “The day after California regulators handed driverless car companies a major victory, allowing them to expand their services without restriction in San Francisco, a herd of robotaxis decided to celebrate by breaking down in the middle of a busy street.
According to several local news reports, 10 Cruise vehicles sat paralyzed in a busy intersection near the Outside Lands Music Festival, causing a traffic jam and drawing exasperation from witnesses. The company told KPIX that the music festival caused “wireless connectivity issues” with its vehicles. In other words, festivalgoers were overwhelming the cellular networks, making it difficult for Cruise’s vehicles to send and receive information.
It was a bizarre end to a week that otherwise represented a significant milestone in the development of autonomous vehicles. The California Public Utilities Commission (CPUC) overrode the concerns of San Francisco’s transit and fire officials as well as several hundred local residents who testified during the six-and-a-half-hour hearing to approve a dramatic expansion of robotaxi services in the city. The orange cone protest did not achieve its desired outcome.
And it was a sign of more conflict to come, as cities that serve as ground zero for this science experiment face pushback from states that set the rules of the road for driverless cars and seek out conformity in how the technology is regulated…. ” Read more Hmmmm… Of course these services need complete public support; else, they are trivial to sabotage. As I’ve repeated many times, if I am not at worse indifferent to these vehicles running up and down my street, then I’ll just let my dog run out in front of one. [Don’t worry – I would never actually do this, but you get the point] I’ll then come out with my car jack, lift it onto cinder blocks under the frame, and steal its tires. The purpose of dash cams is to protect oneself from insurance fraud and prove one’s innocence. If these systems aren’t overwhelmingly thought to be in the best interest of the community they have zero chance of succeeding. If all they are doing in San Francisco is providing an alternative to those who would use Limo/taxi/Uber/Lyft at a “20% discount”, the probability that they’ll fail the Proof-of-Market” approaches 1.0. Alain
Level 3 Automated Vehicles and Criminal Law
W. Widen, Aug. 6, “Current events focus a spotlight on potential criminal liability for operation of an automated vehicle. In Arizona, the safety driver in an Uber robotaxi pled guilty to negligent homicide for a fatality that occurred while an automated driving system (ADS) was engaged. Shortly before that, the owner of a Tesla pled no contest to a charge of negligent homicide for fatalities caused while Tesla AutoPilot, which automates vehicle control under driver supervision, was engaged.
In both cases, automation controlled the braking, speed and steering of the vehicle at the time of the accident. Prosecutors in both cases pursued criminal charges against the human operator on the theory that, despite use of an automation system, both drivers had ultimate responsibility for the safe operation of the vehicle. Assignment of responsibility to the human operator in these cases is consistent with limited existing case law. However, the decision to prosecute ignored the very real problem of automation complacency as an excuse, though it may have been a mitigating factor in sentencing without jail time…. ” Read more Hmmmm… It is but the tip of the iceberg, With ”Level 2” systems, the driver is clearly the responsible entity. With “Level 4” there is no driver, so the manufacturer and the franchisee providing the ride, are clearly the responsible entities.
“Level 3” is some hybrid for which the manufacturer, because of its deep pockets, will always be dragged in, even if the consumer/driver has been totally irresponsible. The liability implications to the OEMs are going to be such that the probability that “Level 3” systems will pass a “proof-of-market” is essentially zero. Alain
Cruise AVs Now Testing In Charlotte, North Carolina
W. Hunt, Aug. 17, “Autonomous vehicles from GM’s robotaxi subsidiary Cruise have just begun testing in Charlotte, North Carolina’s biggest city, according to a tweet on X, bringing Cruise AVs to the ninth metropolitan area across the U.S.
Cruise promises in its tweet that there are “more details to come” and that it continues to “work towards going driverless in your city.”The robotaxi company has achieved a number of milestones in recent days. Its expansion to new urban areas has picked up the pace, with Cruise AVs starting testing in Atlanta, Georgia earlier this month after putting autonomous wheels on pavement in Tennessee’s Nashville in late July.…. ” Read more Hmmmm… I hope Cruise has done its homework and is riding a red carpet into Charlotte (although I missed the unveiling of that red carpet. Hopefully this is about deployment and not testing.)
The really good news is that Cruise is getting closer to New Jersey. Nashville is 833.9 miles from Trenton, but Charlotte is “only” 574.2 miles. That’s 359.7 miles closer!. Yea! 😎 Alain
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IATR 2023 36th Annual Conference
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Conference
San Jose, CA
Nov. 30 -> Dec. 1, 2023
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