One of the world’s leading writers on technology is warning that, far from delivering global mobility domination, the introduction of driverless cars will bankrupt ride sharing companies like Uber.
In his new book WTF?: What’s the Future and Why It’s Up to Us, expert Tim O’Reilly warns that, “If you actually understand the business model of Uber and Lyft, you realise how fatuous much of the analysis is of the impact of driverless cars on these platforms.”
As the website boingboing.net notes, O’Reilly, who’s the man who coined terms such as Open Source and Web 2.0, writes that the reason Uber and Lyft has been so successful against traditional taxi companies is because they part-time drivers supplying their own cars, which means the number of cars they have scales automatically to meet demand. When there’s a lot of demand, there are many more cars. When there is not much demand, there are fewer cars. So their expenses go up and down in line with revenues.
However, he writes, “Now imagine they have all autonomous cars on the road. They have to have enough cars to meet that peak demand. You see these statements that they won’t have to pay drivers anymore and the cars will be fully utilised. No, the cars will be very lightly utilised because they have to have enough cars for peak demand. It only works if those autonomous cars belong to someone else who will take on that risk. If they put the cars on their balance sheet, they are going to have lower utilisation, they are going to have all the costs, and the business will be actually worse.”
The book is available on Amazon.