A former director of the car hire company Dollar Thrifty is warning that the business plan for driverless taxis may not stack up.
Consultant Maryann Keller, who spent years on Wall Street advising the automotive industry, has blogged on LinkedIn questioning Uber’s, and similar companies’, apparent plans to replace drivers with autonomous vehicles.
Calling the company’s present model “brilliant” because it takes a proportion of a fare for private citizens using their own cars as taxis, thus avoiding vehicle depreciation, maintenance expenses and insurance, she asks how that will work with autonomous cars that eliminate the people who shoulder the responsibility for the majority of vehicles.
“Having spent twelve years as a Board Member of Dollar Thrifty, the car rental company, I am well aware of the capital and operational investments required to manage a fleet of a hundred thousand or more vehicles,” she writes. “And those needs don’t change even when the cars are driverless. In fact, the car rental model approximates what ride-sharing on a large scale requires.
“Cars, whether autonomous or not, cost a lot of money which has to be paid to the manufacturer before they go into a fleet. A small fleet of 100,000 vehicles at $40,000 per unit amounts to $4 billion that would have to be paid by some entity.”
She asks who will invest to own these vehicles, especially because it is so different to the one currently run by the likes of Uber.
“The autonomous car advocates have focused on whiz-bang technology and the ability to summon transportation with a tap on the app,” she concludes. “But the economics of autonomous cars might limit their appeal only to major metro areas… They are, after all, cars that have to be acquired, serviced, repaired, insured and depreciated thereby transforming the asset light balance sheet of an app company into something more akin to that of a rental car business.”