A model weighs vehicle cost and ownership to assess benefits to riders, drivers and companies
After years of testing, delays and setbacks, self-driving vehicles are finally on their way to the big ride-hailing services. Lyft, in a partnership with Ford Motor Co. and an artificial intelligence startup, plans to start a robotaxi service in Miami by the end of 2021. Uber, in a separate joint venture, expects to have autonomous cabs on the road by 2024.
The companies have invested heavily in autonomous-vehicle technology for good reason. They believe widespread use of AVs would boost profits by dramatically reducing their biggest cost center: wages paid to human drivers.
That might not be the case. In a study forthcoming in the journal Manufacturing and Service Operations Management, UCLA Anderson’s Auyon Siddiq and UC Berkeley’s Terry A. Taylor develop a game-theory model to discover how access to AVs will affect the ride-hailing companies, their drivers and their riders. Their findings suggest that AVs aren’t a sure road to profitability.
“Stakeholders in the ride-hailing industry should be mindful of thepossibility that AVs can actually hurt profitability in some markets, as a result of intensified price competition,” Siddiq says in an email exchange.
In their model, the authors consider three sets of alternatives:
- Do the companies own or lease the vehicles, or do they deploy AVs owned by private individuals as needed? Owning or leasing AVs commits the companies to an upfront investment, while relying on individually owned vehicles allows them to bring cars into service only as market conditions require.
- Is it more or less expensive to access AVs? If the cost of bringing AVs into a company’s fleet is relatively low, it can put more on the streets. But so can its competitor.
- Is competition more intense for riders or for drivers? Or looked at another way, how much do companies have to cut fares to attract ridersor raise wages to attract drivers?
Who benefits from the adoption of self-driving taxis, the authors found, depends on different combinations of these variables.
Are Autonomous Vehicles Profitable?
Ride-hailing companies can profit from owning AVs, the findings suggest, but only if the vehicles are relatively cheap and if the cost of paying drivers is relatively high. A fleet of AVs would be unprofitable if the vehicles are expensive and if competition for riders is intense, driving down fares.
The reason, the model suggests, is that owning the vehicles immediately requires a company in a competitive market to reduce fares in order to attract more riders, which in turn forces its rival to respond with price cuts. When competition for riders is more intense, the price war could cause fare revenues to fall faster than the savings from lower driver pay. If the cars are expensive, profits are squeezed.
Using individually owned vehicles, surprisingly, is profitable only if the AVs are expensive. That’s because, if AVs can be cheaply called into service as needed, a rival ride-hailing company can easily enter into a costly price war, hurting profits for both companies.
“Depending on the cost of AVs and market conditions, these lower prices can end up reducing profit of both platforms, because the intensified price competition outweighs the cost benefits of AVs,” Siddiq says in an email. “If AVs are cheap, then it’s possible both platforms come out ahead.”
Riders generally benefit from having more AVs in service since rides become cheaper and more readily available. For drivers, the harm is obvious — after all, replacing humans is the whole point, and even a limited supply of robotaxis can drive down wages. Another question the authors consider is: Do the benefits to riders outweigh the losses suffered by drivers?
They do — but again, only if AVs are relatively cheap. Cheaper vehicles mean more get put into service, lowering fares. Since there are more riders than drivers, the combined welfare of the two groups comes out to a net positive. When AVs are expensive, driver wages still suffer, but less so, but not enough riders benefit from low fares to offset those losses.
Do Autonomous Vehicles Increase Overall Social Welfare?
In the model, ride-hailing companies sometimes profit and sometimes don’t, depending on how the vehicles are owned. “Agent” welfare — the net effect of AVs on riders and drivers — always is positive when AVs are cheap, no matter who owns them. Is there any situation where the combination of all three — companies, riders and drivers — sees a net benefit from the adoption of AVs?
Here, access to individually owned AVs is the clear winner. When they’re cheap, the benefit to riders is greater than the loss in company profits, with a net gain. When they’re expensive, profits are high enough to compensate for reduced benefits to riders.
This is a situation envisioned by Tesla CEO Elon Musk, who has proposed a system in which Tesla owners make their idle vehicles available to a ride-sharing service in exchange for a portion of the fares. It, however, isn’t the approach being taken by companies, at least not initially.
Instead, Uber and Lyft will introduce their first robotaxis in partnerships with automakers and AV startups. While the ride-hailing companies won’t own the vehicles outright, Siddiq says that this approach is closer to its company-owned model, since the joint venture makes a decision about how many vehicles to deploy ahead of any demand signals.
If policymakers want to encourage adoption of AVs, the findings suggest, their best bet is to do whatever possible to reduce their costs. If that fails, they can try to make it easier for companies to use vehicles owned by individuals. And since drivers invariably face the loss of jobs and wages, their advocates can either try to obstruct adoption of AVs or push for laws designed to protect drivers’ interests.
FAQs
Prevention of car crashes
Computers based on sophisticated systems and algorithms will essentially eliminate costly human error. Major causes of accidents, including drunk or distracted driving, will not be factors with self-driving cars. It's estimated self-driving cars can reduce accidents by up to 90%.
Why is autonomous driving so hard? ›
Autonomous systems are not as capable as people because their "perception and prediction algorithms are not as good as how a human brain processes and decides," said Chris Borroni-Bird, an independent consultant who previously led advanced-vehicle programs at GM and Waymo.
How does path planning for autonomous vehicles work? ›
Path planning is like the brain of a self-driving car. It's how the vehicle makes decisions about how to move through the world. In our model of the self-driving car software stack, it comes after perception (how the vehicle understands the world) and localization (how the vehicle determines its position in the world).
Which company has the best autonomous driving? ›
Mobileye. Mobileye, a pioneer in ADAS and other life-saving technologies, is the market leader in self-driving enablement. Using its skillsets in active driver safety and machine vision, Mobileye has created a world-class autonomous vehicle platform.
Who has the best autonomous driving? ›
There's a big gulf in performance between the best and worst of today's assisted driving systems. The Tesla Model Y and Audi RS Q8 gain the highest overall score, but the Model Y was the only car to score points in all of the tests, being the only one to perform the emergency stop test at 42mph.
Do people trust autonomous driving? ›
Roughly 68% of Americans say they're afraid of self-driving cars, according to a new poll by AAA, a huge jump from 2022 when 55% of Americans said they're afraid of the nascent technology. Just 9% of Americans say they “trust” self-driving cars, while 23% of respondents to the poll said they were “unsure.”
What are some problems that can arise with autonomous vehicles? ›
The 6 Challenges of Autonomous Vehicles and How to Overcome Them
- Traffic Management. AV evangelists often refer to the traffic flow efficiency that could be created by self-driving vehicles. ...
- Infrastructure. ...
- Revenue. ...
- Liability Insurance. ...
- Police and Emergency Response. ...
- Social Justice and Equity.
A fully autonomous car would be self-aware and capable of making its own choices. For example, you say “drive me to work” but the car decides to take you to the beach instead. A fully automated car, however, would follow orders and then drive itself. The term self-driving is often used interchangeably with autonomous.
What is the difference between automated and autonomous driving? ›
Levinson says it more plainly: “A truly autonomous car would decide on destination and route as well as control within the lanes. An automated car would follow orders about destination and route, and may only adopt some lane-keeping or car-following guidance.”
What does Tesla use for autonomous driving? ›
Each new Tesla vehicle is equipped with eight external cameras and powerful vision processing to provide an additional layer of safety. All vehicles built for the North American market now use our camera-based Tesla Vision to deliver Autopilot features, rather than radar. Autopilot comes standard on every new Tesla.
One of the largest car manufacturers in the self-driving world is General Motors. The company purchased the self-driving startup Cruise in 2016. Cruise began their San Francisco autonomous driving taxi services in 2021, and per their website, dedicate one percent of their earnings to community donations.
What is the best stock for autonomous vehicles? ›
Investing in self-driving car stocks in 2023
| Company | Market Capitalization |
|---|
| Tesla (NASDAQ:TSLA) | $357.0 billion |
| Nvidia (NASDAQ:NVDA) | $370.3 billion |
| Qualcomm (NASDAQ:QCOM) | $129.3 billion |
| Micron Technology (NASDAQ:MU) | $61.9 billion |
4 more rowsThe 2023 Corsair, starting at about $40,000, will be the lowest-priced vehicle in the company to offer the technology. Ford's system uses a suite of cameras and sensors in addition to mapping for hands-free driving on more than 130,000 miles of dedicated highways in North America.
Who is the father of autonomous driving? ›
Later, in the 1980s, the German Ernst Dickmanns, who is considered the father of the autonomous vehicle as we know it today, converted a Mercedes-Benz van into an autonomous vehicle guided by an integrated computer. In 1987, the car managed to travel through traffic-free streets at a speed of 63 kilometers per hour.
Who has level 4 autonomous driving? ›
Hyundai Motor Group launched a pilot Level 4 autonomous driving service in Sejong City and the Namyang R&D center in 2021. In 2022, we expanded the pilot service to Gangnam and Pangyo. We are currently continuing our research and development to expand the Level 4 autonomous driving pilot service.
Does anyone actually want self-driving cars? ›
Most adults who say driverless cars are a good idea for society say they would want to ride in one (86%), while most who see these vehicles as a bad idea say they would not want to ride in one (89%).
What are the negative effects of autonomous driving? ›
The following 10 consequences are likely to happen if driverless cars are in our future.
- Unemployment. ...
- Decreased private ownership of cars. ...
- Auto insurance prices. ...
- Reduced air pollution. ...
- Hacked vehicles. ...
- Fewer parking spaces. ...
- More accessibility. ...
- Increase in drug and alcohol use.
Automated Vehicle Accident Stats
In 2022, Automakers reported approximately 400 crashes of vehicles with partially automated driver-assist systems to the NHTSA. 273 of these accidents involved Teslas (the most common vehicle with self-driving capability), 70% of which used the Autopilot beta at the time.
What is the biggest benefit of autonomous cars? ›
Benefits of Automated Vehicles (AVs)
- Greater Road Safety. Government data identifies driver behavior or error as a factor in 94 percent of crashes. ...
- Reduced Congestion. ...
- Environmental Gains. ...
- More Productivity. ...
- Greater Independence. ...
- Better Land Use. ...
- Contactless Delivery. ...
- International Competitiveness.
Autonomous driving's future: Convenient and connected. By 2035, autonomous driving could create $300 billion to $400 billion in revenue. New research reveals what's needed to win in the fast-changing passenger car market.
Bad weather is one of the significant challenges of driverless cars. Self-driving cars use a broad range of sensors – camera sensors, radars, and lidars to detect the objects on the way. Camera sensors help the car view and identify the object, whether a pedestrian, cyclist or another car.
Are autonomous vehicles safer than cars operated by humans? ›
Autonomous vehicles are orders of magnitude safer in preventing many types of accidents that have to do with human driver error — for instance, simply rear-ending another vehicle because the driver wasn't paying attention. These types of accidents will practically never happen with autonomous cars.
What is one of the biggest challenges for autonomous vehicle manufacturers? ›
One of the biggest challenges for autonomous vehicle manufacturers, according to the case The Arrival of Autonomous Cars—Bright Future or Looming Threat? was: Ensuring the vehicles were safer than driver-controlled automobiles. According to McKinsey and Company, which position cannot be easily replaced with robots?
What are the 3 types of autonomous vehicle sensors in self-driving cars? ›
The majority of today's automotive manufacturers most commonly use the following three types of sensors in autonomous vehicles: cameras, radars, and lidars.
Will autonomous cars reduce traffic? ›
In addition to making our roads safer, these capabilities are hoped to eliminate stop-and-go traffic, increasing road capacity, and optimising traffic flow. Overall, the prediction is that autonomous vehicles will reduce traffic congestion. But just how realistic a future this is remains unclear.
Are self-driving cars AI or machine learning? ›
What is a self-driving car? A self-driving car (sometimes called an autonomous car or driverless car) is a vehicle that uses a combination of sensors, cameras, radar and artificial intelligence (AI) to travel between destinations without a human operator.
Is self-driving the same as ADAS? ›
ADAS Development vs Autonomous Driving
ADAS are features that can be found in many modern cars, while autonomous driving is a system that allows a car to operate without human control. Essentially, ADAS is on a spectrum of autonomy that leads to full driving automation at Level Five.
What are the two difference between autonomous and automated system? ›
Autonomous and automated: Defined
The decisions made or actions taken by an automated system are based on predefined heuristics. An autonomous system, on the other hand, learns and adapts to dynamic environments, and evolves as the environment around it changes.
Can you sleep while driving Tesla? ›
Even though Teslas can self-drive on the electric vehicle's autopilot function, it is illegal for drivers to be asleep or unconscious while behind the wheel.
Does Tesla autopilot stop at red lights? ›
Traffic Light and Stop Sign Control is designed to recognize and respond to traffic lights and stop signs, slowing Model Y to a stop when using Traffic-Aware cruise control or Autosteer.
With a Tesla, you won't have to worry about that. The battery in any Tesla car will last at least 267 miles on a single charge. The battery itself will last up to 35 years. Find out which Tesla model is perfect for you by looking at the mileage range per charge, the battery life, and the cost of a replacement battery.
What are 3 problems with self-driving cars? ›
Concerns about self-driving cars include safety, technology, autonomy, and social implications.
What are the disadvantages of autonomous cars? ›
Disadvantages of Driverless Cars
- Drivers may need to attend special training classes to learn how to operate their autonomous vehicle safely.
- Vehicles would depend more on GPS for direction and, unfortunately, GPS isn't 100 percent accurate.
- Driverless cars will cost substantially more than we're used to.
Ford, Nissan and Tesla have all announced plans to introduce self-driving cars in the next few years and by 2030, up to 15% of new cars could be fully autonomous.
What problems will driverless cars solve? ›
In addition to making our roads safer, these capabilities are hoped to eliminate stop-and-go traffic, increasing road capacity, and optimising traffic flow. Overall, the prediction is that autonomous vehicles will reduce traffic congestion.
What is the biggest challenge for self-driving cars? ›
The industry is facing several technical as well as legal challenges, including radar interference, driving in extreme weather conditions, and the current lack of necessary laws and regulations. Most autonomous cars use three technologies to navigate: LiDAR (Light Detection and Ranging), cameras, and radar.
Is self-driving cars the future? ›
Autonomous driving's future: Convenient and connected. By 2035, autonomous driving could create $300 billion to $400 billion in revenue. New research reveals what's needed to win in the fast-changing passenger car market.
Are there any moral issues with self-driving cars? ›
There are also ethical concerns about who should be held responsible in the event of an accident involving an autonomous vehicle. Some believe that the manufacturers of these vehicles should be held accountable, while others believe that the drivers should still be held responsible.
Is autopilot safer than driving? ›
Stats Prove Safety
According to the report, Tesla cars with Autopilot turned on are much safer than cars driven by people. In Q4 2022, there was only one crash for every 4.85 million miles driven.
Who is responsible for a fully autonomous car crash? ›
“If you ask automobile manufacturers,” said Robertson, also the law school's director of the Center for Professional Ethics, “they'll tell you the driver is always fully responsible—even when supervised autonomy fails—because Advanced Driver Assistance Systems require constant human oversight, even when autonomous ...
Level 5 vehicles do not require human attention―the “dynamic driving task” is eliminated. Level 5 cars won't even have steering wheels or acceleration/braking pedals. They will be free from geofencing, able to go anywhere and do anything that an experienced human driver can do.
Will cars ever be fully automated? ›
That's not going to happen, unless the technology can mimic human common sense. “We expect that, by 2030, 60% of all new cars will be equipped with Level 2 features. The flip side is current systems are not robust enough to navigate cars autonomously in real-world traffic – arguably due to missing common sense.
