The promise of autonomous cars is not that it can handle your highway commute but complete the full journey from point A to B. When that day comes, it will not only dramatically change road safety, but also open up new business models beyond the current vehicle ownership model to mobility on demand service model.
Elon Musk recently reduced his timetable for full autonomy from 3 years down to 2 years.
“We’re going to end up with complete autonomy, and I think we will have complete autonomy in approximately two years.”
The Model 3 is expected to be the first Tesla vehicle to be equipped with the automaker’s self-driving system.
Two recent studies look into the costs, potential profit and market share of using fully autonomous cars to start a mobility on demand service in Austin, TX. One of the scenarios tested a Long Range Shared Autonomous Electric Vehicle & Fast Charging (LR SAEV Fast Charge) is modeled partly on the upcoming Tesla Model 3 using Level III charging infrastructure (DC fast-charging like a Tesla Supercharger).
The first study by T. Donna Chen of the University of Virginia, Kara Kockelman and Josiah P. Hanna of the University of Texas at Austin looks at the costs and charging infrastructure choices. The authors simulate 10% of trip demanded on a 100 mile by 100 mile grid over a simulated Austin, TX. A fleet of 31,859 Tesla Model 3s and 1,517 Level III charging stations would be required.
Assuming costs of $50,000 per Model 3, $10,000 for full autonomy and $45,000 per Level III charger – which could be considered a safe to high estimation of the costs considering Musk estimates the average sale price of the Model 3 will be $42,000 – it comes to $0.479 per mile plus an additional $0.184 per mile for general admin for a total costs of $0.663 per mile.
The researchers elaborated on the results:
These costs are on the low end of current manually-driven free-float carsharing services such as Car2Go, which charges roughly $0.70 to $1.23 per mile in Austin, Texas (assuming trips are between 2 to 10 miles and travel speeds are between 15 to 35 mph). Under this pricing assumption, SAEV [Shared Autonomous Electric Vehicle] users would pay roughly 21 to 49% of what is currently charged by transportation network companies like Uber and Lyft (whose equivalent per-mile pricing is $1.50 to $3.18 in Austin). In fact, these costs are competitive with AAA (2014) estimates of average costs of private vehicle ownership, which ranges from $0.40 to $0.95 cents per mile depending on annual mileage and vehicle type, suggesting that availability of a SAEV fleet can have significant impacts on private vehicle use (and ownership), particularly for low-mileage households.
The second study follows up the first study looking at the potential demand for this service compared to privately owned manually driven vehicles and transit service. Assuming the retail price of the service was at $1.00 per mile demand would be approx 14% of trips in the 100 mile by 100 mile grid over a simulated Austin, TX. At a price of $0.75 per mile the demand would increase to 39% of trips, according to the study.
At 39% of trips this would require 137,323 cars serving 4.26 million trips a day with average wait time of 2.6 minutes with revenue per day of $16.2 million and 1.85 revenue to cost ratio. This would be $5.9 billion in revenue per year. In comparison, Tesla generated $5.3 billion of revenue in 2015.
The researchers elaborated on the results of the second study:
These results suggest that once EV and AV technologies gain market maturity and become less costly, low- VOTT [Value of Travel Time] trip makers will start to choose SAEVs over transit, particularly in areas with poor transit service (as reflected by longer transit-access and wait times). Model results also suggest that SAEVs will attract longer trips away from private vehicles, particularly among high-VOTT travelers who find SAEV travel much less burdensome than driving.
We know Tesla is possibly considering a mobility on demand service based on the answer Elon Musk gave in an earning call last year. Some Wall Street analysts are even accounting for the possible new business in their valuation models.
So when does Tesla Mobility get announced? Is that part 2 of the Model 3 unveiling?
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Whoa! that is a lot of very profitable food for thought. those estimations explain travis kalanick’s eagerness to buy out a whole year’s full production at fremont – he couldn’t resist the lure of those running costs, no more strikes from drivers and the cost savings from doing away with them altogether.
Yes, profit. As we all know profit is all that matters now, and Elons sole reason for starting tesla…..
Profit is _a_ reason, certainly not the sole. There is nothing wrong at developing interesting solutions, especially when they are going in the right direction, AND making profits at the same time, even huge profits. Exhaustion of natural resources, including fossile fuels, reduction in emissions of all kinds of polutants and greenhouse gasses wont be solved if it’s a loosing business. It needs people to demonstrate that they are solutions and that they are profitable. Elon Musk, amongst others, demonstrates that. And he most likely has a lot of fun at doing that, along with the people who are doing it with him.
Yeah he risked his fortune, his credibility and his other company on a company even he didn’t believe would succeed with a vague vision that it could maybe make him boatloads of money, sure.
Between every pair of users, a pass through a cleaning station will be required. No one will use a service where their next ride might be in a small vehicle that has been freshly covered in puke by a sick child. I think this “study” is based of riders being perfect automatons who only do the right thing. You can’t even get people to clean the lint filters after using a dryer in a laundromat, how much care or consideration do you think people will extend to a next user they will never face? Or will there be camera surveillance of all occupants at all times? Real time monitoring, or just reviewed upon the existence of a problem? Who will review? Release surveillance and trip records to law enforcement as a matter of routine operations?
And what is that “% of trips not served” figure? Does it mean that if you rely on the service there is a 2-4% chance you won’t get picked up. Who can face that probability?
In the ivory tower, you can always assume the real world doesn’t exist and massage spreadsheets until something starts to look good. It doesn’t mean much until you try it out.
It seems that the chart is mis-represented. Should be looking at 0.0663 per mile not 0.663.
Pretty much all that Tesla needs is to build an app and it’s the end of Uber.
Meh! Driverless, on demand autos is Utopia. Our roads are a mess with potholes, absent or faded lane markings and all kinds of road hazzards. Drive around New Orleans to get my drift. Ever take a ride in one of the cabs? They are dirty, smell cigarettes, old booze and puke. The big advantage of having own car is the flexibility. People have a passion for their cars, just they got for their wives, gf, etc. Would you rent a wife on demand?
Without detailed active sensors, I’m very doubtful about a 2 year timeline for full autonomy. It’s not that it’s impossibly difficult but the current system is struggling to handle even very easy situations so full autonomy where you can look away or sleep, that seems like a leap.
But maybe he means full autonomy where it can sometimes drive from A to B where you have to watch it like a hawk, ever ready to take control within 1 second. That should be quite easy.
May I ask where you got all of that data? I may be wrong, but I’m fairly sure that Model 3 doesn’t exist yet. Proper self-driving software doesn’t exist either.
The studies are linked in the article.