27th edition of the 10th year of SmartDrivingCars eLetter
Reuters, July 26, “General Motors Co (GM.N) has lost nearly $5 billion since 2018 trying to build a robotaxi business in San Francisco, and now as the automaker’s Cruise unit starts charging for rides, the losses are accelerating.
GM said on Tuesday it lost $500 million on Cruise during the second quarter – more than $5 million a day – as it began charging for rides in a limited area of San Francisco. … that may be the case for the last quarter, but the chart below from GM’s 6/30/222 10-Q Shows ($800M) for the last 6 months or $4.38/day when divided by 182.625 Whew!😅…
Cruise’s costly effort to transform autonomous driving technology from a long-term research project to a profit-spinning business comes as investors are backing away from riskier bets on technology, and reassessing how soon robot vehicles of any kind will be deployed in large scale on public roads.
Shares of autonomous vehicle technology company Aurora Innovation Inc (AUR.O), for example, are down 80% for the year to date. Shares of robo-trucking company TuSimple Holdings Inc (TSP.O) have lost more than 70% of their value. Some automakers, including Ford Motor Co (F.N), have scaled back investments in automated vehicle units, or taken on partners to share the costs….
Cruise’s losses for the first six months of the year deepened to $900 million from $600 million during the same period in 2021 – when Cruise was not charging for rides. Higher compensation costs to keep staff on board after putting aside plans for an IPO were one factor in the results, GM executives said.
Chief Executive Mary Barra said on Tuesday she is still bullish on Cruise, and reaffirmed a forecast that the unit could generate $50 billion a year in revenue from automated vehicle services and technology by 2030. .” Read more Hmmmm… Nice optimism. The source of the reality check above comes from GM’s 6/30/222 10-Q. Start reading from page 41. then on page 43:
Whoa! The only nice thing that can be imagined is by assuming that they’ve had essentially zero revenue, the operating costs have “only” been $800M for the last 6 months. That is non-small.
I’d like to suggest that the strategy of trying to create a profitable driverless mobility service for folks that already have 2 or more cars in their garage, have excellent public transit service or travel on expense accounts when wanting to go to between the airport and “downtown” may not be the wisest way to launch such a mobility service. There is little opportunity to be substantially better or even equivalent to what those potential customers already have. Little opportunity to get loyal and repeat customers. The focus to date has been too heavily weighted on getting the technology to work for folks who already have more mobility options than they know what to do with. Great for click-bait; challenging for the 10-Q. What must Waymo’s 10-Q Cash Flow chart look like?
Capturing loyal and repeat customers is really tough when the competition is excellent and entrenched. While pricing can be high, volume is almost non-existent even with nominal pricing. Except for the novelty, the marketplace in the Chandlers and SFs is essentially non-existent. To date those markets have been quiet, at best. What must Waymo’s 10-Q Cash Flow chart look like?
It astonishes me that to date none of the leading driverless companies have spent any money trying to serve the needs of folks that don’t own cars, aren’t traveling using someone else’s money, nor have access to a good public transit system focused on their mobility needs.
These folks definitely can’t pay as much for a ride as those that are being chased by Cruise & Waymo, but there are more of them. Moreover, its almost trivial to provide them with a mobility option that is substantially better than what they have today for many, if not most, of their daily personTrips.
This is the market that we’ve found in New Jersey; in Trenton & Mercer County, Perth Amboy & Middlesex County and Patterson & Passaic County. We haven’t even begun looking in Newark, Camden, Atlantic City and the rest of New Jersey.
The excuse seems to have been that it would be too expensive to deal with NJ’s bad weather, even though, we’ve made it clear that New jersey is not interested in a 365.25 days/yr. mobility solution. We’d be more than pleased with a 350 days/yr. operation. New Jersey has more than 350 good days a year. We aren’t so entitled that we can’t wait for the hurricane to blow through, the snow to be shoveled or the fog to lift before we go about our normal business. We enjoy the “snow day” at home. We are convinced that is actually easier and cheaper to capture recurring and loyal NJ customers.
The rule-of-thumb for a Trenton-MOVES style operation is: a vehicle needs to serve at least 100 personTrips/day. With slightly better ride-sharing and time-of-day pricing, one might be able to get to 150 personTrips/day. To cover a fleet of 100 vehicles, ridership needs to be about 10k to 15k personTrips/day. This kind of utilization leads to per personTrip capitalization costs of less that $1/personTrip for vehicles costing upwards of $150k @ interest rates upward of 7.5%. That is to say, $1/personTrip readily covers the vehicle capital costs even at moderate scales.
Given that trips on-average are less than five miles, vehicle operating costs are less than $1/personTrip.
Management costs are largely fixed. With volume the per personTrip burden decrease enormously, and can’t be more than $0.50/personTrip.
Break-even fare is thus roughly $2.50/personTrip.
An average market fare of $3.50/personTrip delivers a profit of >$1.00/personTrip, >$100/vehicle-day.
A fleet of 100 vehicles delivers a profit >$10k/day, >$3.0M/yr. in the Trenton ODD serving 10k personTrips/day.
From where do these 10k personTrips/day materialize?
Essentially all the riders of NJ Transit rail would love a simple reliable convenient way to get to & from the train. By on-demand service within the community around the train station, loyalty upwards of 80% could be achieved for anyone wanting to go to NYC or within walking distance to any other NJ train station. For Trenton that represents a marketplace of 8,000 personTrips/day that currently drive to & from the station every day and those that currently don’t use the train that would if it was easy and reliable to them to get to AND from the station, when they wanted to get to and from there. Half of the 10k would easily come from serving the Trenton Train Station.
Trenton Central HS has 1,800 students. More than 1,500 live more than a 10 minute walk to the TCHS. Truancy is proportional to how far a student has to walk to school. Trenton MOVES could readily serve 1,250 of these students every day. That’s 1/4 of the needed 10k.
We only need another 2.5k personTrips and we haven’t even begun dealing with getting people to & from work in Trenton, doctors, shopping visiting friends, etc. needed by the 70% of Trenton households who have access to one or zero cars. 100 vehicles serving 10k personTrips/day making >3.0M/year @ an average fare of $3.50/personTrip is just the start of a profitable business. Employing 200 vehicles costing at most $100k at interest rates of less than 7.5% serving 150 personTrips/day at fares of $3.00/personTrip makes way more than $5M per year.
Expanding Trenton MOVES throughout Mercer County giving the opportunity to increase average fare (because of the longer personTrips) to maybe $5/personTrip keeping utilization @ 150 personTrips/vehicle-day of a fleet of 1,000 vehicles and doing a little better on interest rates and cap costs can lead to profits of >$10M/year for Trenton/Mercer MOVES. There are at least 10 replications of Trenton/Mercer MOVES that could be done in NJ by 2030 utilizing a fleet of at least 10,000 vehicles leading to a profit of >$100M/year.
This kind of success leads to having many more people leave their cars at home and frequenting NJ-MOVES as their mobility system. This could lead to a NJ-Moves fleet of >100,000 vehicles is generating a profit of >$1B.
If Mary expects this to be achieved by 2030 and replicated in the 50 other states (on average) as the Universe she expects to exist in 2030, I’m hopeful but skeptical. My point is, that starting with Trenton MOVES as the big bang that achieved her vision seems to me to be a lot clearer that where Cruise/Waymo have chosen to try to create a Big Bang. Seems as if she and Kyle should be taking Trenton and New Jersey much more seriously. Please call me! Alain
SmartDrivingCars ZoomCast 277/ PodCast 277 w/Michael Sena, Editor of The Dispatcher
F. Fishkin, July 30, “A look at cities & mobility, turmoil at VW, the cash problem at Cruise & more. “The Dispatcher” publisher Michael Sena joins Alain Kornhauser & Fred Fishkin for another spirited discussion on episode 277 of Smart Driving Cars.”
Technical support provided by: https://www.cartsmobility.com/
The SmartDrivingCars eLetter, Pod-Casts, Zoom-Casts and Zoom-inars are made possible in part by support from the Smart Transportation and Technology ETF, symbol MOTO. For more information: www.motoetf.com. Most funding is supplied by Princeton University’s Department of Operations Research & Financial Engineering and Princeton Autonomous Vehicle Engineering (PAVE) research laboratory as part of its research dissemination initiative
M. Sena, July 30, “The tragedy of transport planning in the U.S. is that there continues to be a belief that the reason there is low transit ridership is the car industry, which, in a conspiracy with politicians and land speculators, have made mass transit unsuitable for doing the job of moving people from where they are to where they want to go. With the exception of NYC and to a certain extent Boston and Washington, DC, American cities have been built when they were necessary, but with the objective of housing their residents in the type of dwelling they preferred, that is, a house on a piece of land that are both as large as the owner can afford. This has resulted in low densities and, therefore, lower than optimal numbers of riders to support public transit…” Read more Hmmmm… In simple terms, dense cities are expensive. For the super-rich they are great. They can afford big chunks of it and have one or more dachas surrounded by nature. For the poor, it’s the slums that are close to the factories. ( I think of my students who “intern @ JP Morgan”, some/most do become super rich and stay in Manhattan, most/some “move to Jersey and ride NJT”. (or drive, or, now with the remnants of COVID work from home, or at small local clusters.)
The post-Covid Smart City may well be no City, certainly no more Manhattan. Do people really want to live while trapped in those towers? Nice to visit. View is great, but can you really live there. That’s why folks in NYC continue to move to Jersey (The Pandemic’s Impact on NYC Migration Patterns ) or Texas or …
The concentration of people in cities was a move to concentrate workforces to scale processes that required concentrated workforces. If future processes scale without the need to concentrate workers because of communications or cheaper more efficient ways to bring smaller groups of people together, the smart city of the future may well be much broader and way less tall. Alain
Staff, July 24, ” A digital map is to be created of Dubai to pave the way for the first driverless taxis, in a major step forward for the emirate’s autonomous transport strategy.
Two Chevrolet Bolt electric vehicles, equipped with sensors and cameras, are to be used ahead of the wider introduction of high-tech taxis next year.
Dubai’s Roads and Transport Authority said the public-private partnership with US company Cruise was the “first of its kind worldwide”.
The RTA said the Cruise vehicles would initially be used in Jumeirah and driven by specialist drivers…” Read more Hmmmm… I repeated this one because of this issue’s headline story. I’m assuming that the UAE will be paying for this effort and it will show up as revenue for Cruise in GM’s Form 10-Q for quarterly period ending September 30, 2022. (GM’s 6/30/222 10-Q)
I’m really jealous. How do I get New Jersey to get in line to begin a similar initiative. Even though we’re not as credit worthy, we do have customers who could fundamentally benefit from the technology and are right here in the US of A. eMail me!!! (before Baidu 😁) Alain
Press release, July 5, “Mobileye, an Intel company, has launched the EyeQ Kit™ – its first software development kit (SDK) for the EyeQ® system-on-chip that powers driver-assistance and future autonomous technologies for automakers worldwide. Built to leverage the powerful and highly power-efficient architecture of the upcoming EyeQ®6 High and EyeQ®Ultra processors, EyeQ Kit allows automakers to utilize Mobileye’s proven core technology, while deploying their own differentiated code and human-machine interface tools on the EyeQ platform.
How it Works:…” Read more … Hmmmm… Very nice. With this kind of cooperation between Intel and MobilEye, Is Intel really going to spin off MobilEye in this market? Alain
S. Hemmersmeier, July 22, “Las Vegas-based startup Halo.Car launched a transportation service this week that allows customers to rent cars piloted by a remote driver, operating the vehicle from Halo.Car’s office.
The service, which is temporarily free, is in its testing phase and only available in the downtown Las Vegas area. The remotely driven cars will also have a safety driver inside, in case any problems arise….” Read more Hmmmm… Attendant on-board, whew! Free.. OK, startup mentality.
Remotely driven.😕 Needs continuity with minimal latency. Tough enough using dedicated wiring within a vehicle. Wirelessly over shared infrastructure. I’m skeptical and not a fan. 🙁 Alain
N. de la Canal, July 19, “This small city ditched its buses. Its public Uber-like service has been a big hit…
“For $1.6 million, we’re providing well over twice as many trips and covering 100 percent of the city with a system that picks you up within 15 to 20 minutes of your request, versus a bus that was only running once an hour.”…
A previous version of this story said the shuttle service gave about 37,000 rides a week compared with 26,000 bus rides under the old system. Actually, the numbers are 3,700 and 1,400 trips, respectively….” Read more Hmmmm… Yup, Uber/Lyft is much better than buses in many, if not most, places. The problem is that its revenue of ($1.50 x 3,700 x 52 =) $288,600/year is 10% of its $1.6M cost of operation (or $1.9M depending on how the farebox revenue is allocated). Not at all pretty (but more than twice as pretty as the service using buses).
It remains a serious challenge to deliver affordable mobility when one needs to pay a chauffeur/attendant. Alain
D. Shepardon, July 20, “General Motors (GM.N) and Ford Motor (F.N) have asked U.S. auto safety regulators to grant exemptions to deploy a limited number of self-driving vehicles without human controls like steering wheels and brake pedals.
The National Highway Traffic Safety Administration (NHTSA) on Wednesday published the separate petitions and opened them for public comment for 30 days.
NHTSA has authority to grant petitions to allow a limited number of vehicles to operate on U.S. roads without required human controls. Both automakers want to deploy up to 2,500 vehicles a year, the maximum allowed under the law, for ride sharing and delivery services. Neither seek approval to sell self-driving vehicles to consumers….” Read more Hmmmm… This should be an absolute no-brainer for NHTSA. 2,500 vehicles per year… that’s peanuts and won’t put a dent into anything. There are more than 250M (100,000x more) registered road vehicles with steering wheels. One can’t get enough experience to measure anything unless one has more than a few.
Forget about marketing any dent into safety, equity, environment or market acceptance unless one has at least this number of entities available. McKinsey claims that more than $300B has been invested in driving technology that doesn’t need a steering wheel. That investment deserves to be able to demonstrate that it works and deserves to have an opportunity to deliver market and societal returns that begin to recoup that investment.
Allowing these responsible entities that have invested so much to begin by building a minuscule number of special purpose vehicles should be an absolute no-brainer. None of these are going to be sold to individuals.
Such restrictions serve no measurable public good. C’mon NHTSA! just say yes. Monitor the progress. You can readily recall all and shut them down should the need arise. Alain
A Hawkins, July 27, “A motorcyclist in Draper, Utah, was killed early Sunday morning when a Tesla driver using Autopilot slammed into the rear of his bike. It is the latest crash involving Tesla’s advanced driver-assist system to draw scrutiny from federal investigators at the National Highway Traffic Safety Administration (NHTSA).
The incident occurred just after 1AM Sunday on southbound Interstate 15, according to local reports. The motorcyclist, who has not been identified, was traveling southbound near the Salt Lake and Utah County lines when the Tesla approached from behind. The Utah Department of Public Safety said the Tesla driver collided with the back of the motorcycle, throwing the motorcyclist to the ground and killing him instantly….” Read more Hmmmm… Needs to be investigated. Tesla should have and should make-public the data leading up to the crash. The circumstances leading to this crash need to be understood by all so as to best avert this kind of tragedy to reoccur. Alain
Tesla expands its own insurance based on real-time driver data to two more states – now in 10 states
F. Lambert, July 26, “….Tesla updated its website to note that its real-time data insurance product is now available to customers in the states of Utah and Maryland.
The addition makes for a total of 10 states with Tesla Insurance based on real-time driving data:
Tesla still hasn’t been able to get the full product adopted in California, but the automaker recently started to let people who get Tesla Insurance in California use the Driver Safety Score for “educational purposes.”
Recently, Tesla filings for its insurance products have surfaced in Florida and New Jersey – indicating that the automaker is looking to expand in those states soon.
In October of last year, CEO Elon Musk said that Tesla Insurance is aiming to be “in most states” by the end of 2022. The regulatory landscape for insurance is complex and varies state by state. Therefore, Tesla has a lot of work to do to launch in any new state, but the effort appears to be paying off with many new markets being added in the last few months….” Read more Hmmmm… Elon has the data to be able to most reliably compute expected liability for any individual. Insurance pricing is all about estimating expected liability which is data driven. Elon has the best data, so he should be best able to price.
If your rates are higher, you won’t get the business. If your rates are lower, your profitability is questionable. Matching his prices isn’t effective because you don’t have his loyalty. The competition can’t win without losing. Sorry. Data rules. Alain
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