# The math says we probably make a lot more robocars -- maybe

Topic:

I frequently see people claim that one effect of robocars is that because we'll share the cars (when they work as taxis) and most cars stay idle 95% of the time, that a lot fewer cars will be made -- which is good news for everybody but the car industry. I did some analysis of why that's not necessarily true and recent analysis shows the problem to be even more complex than I first laid out.

To summarize, in a world of robotic taxis, just like today's taxis, they don't wear out by the year any more, they wear out by the mile (or km.) Taxis in New York last about 5 years and about 250,000 miles, for example. Once cars wear out by the mile, the number of cars you need to build per year is equal to:

Total Vehicle Miles per year

As you can see, the simple equation does not involve how many people share the vehicle at all! As long as the car is used enough that the car isn't junked before it wears out from miles, nothing changes. It's never that simple, however, and some new factors come into play. The actual model is very complex with a lot of parameters -- we don't know enough to make a good prediction.

## People travel more in cars.

It's likely that the number of miles people want to travel goes up for a variety of reasons. Robocars make car travel much more pleasant and convenient. Some people might decide to live further from work now that they can work, read, socialize or even sleep on the commute. They might make all sorts of trips more often. Outside of rush hour, they might also be more likely to switch from other modes, such as public transit, and even flying. Consider two places about a 5 hour drive apart -- today flying is going to take just under 3 hours due to all the hassles we've added to flying, even with the improvements robocars make to those hassles. Many might prefer an uninterrupted car ride where they can work, watch videos or sleep.

### Vehicles run empty to reposition

Regular taxis have wasted miles between rides. Indeed, a New York taxi has no passenger 38% of the time. Fortunately, robocars will be a lot more efficient than that, since they don't need to cruise around looking for rides. Research suggests a more modest 10% "empty mile" cost, but this will vary from situation to situation. If you need the robotaxi fleet to constantly run empty in the reverse commute direction, it could get worse. Among those who believe robocars will be more personally owned than used as taxis, we often see a story painted of how a household has a car that takes one person to work, and returns home empty to take the 2nd person, and then returns again to take others on daytime errands. This is possible, but pretty inefficient. I think it's far more likely that in the long term, such families will just use other taxi services rather than have their car return home to serve another family member.

## Cars last longer

The bottom part of the equation is likely to increase, which reduces the number of cars made. Today, cars are engineered for their expected life-cycle -- 19 years and 190,000 miles in California, for example. Once you know your car is going to have a high duty cycle, you change how you engineer it. In particular, you combine engineering of parts for your new desired life cycle with specific replacement schedules for things that will wear out sooner. You want to avoid junking a car with lots of life in the engine just because the seats are worn out, so you make it easy to replace the seats, and you have the car bring itself to a service center where that's fast and easy.

Yes, I am serious about the seats. In a robotaxi world, people will not want to order up a taxi that has a 150,000 mile worn out interior, though they might do it for a discount. Cars of the future will be highly instrumented with sensors. They will know precisely the wear and tear on all components and replace and maintain them in a highly efficient way.

Electric cars, in general, are expected to have certain components last longer because they are simpler and very reliable with far fewer parts. Electric motors that go millions of miles are not at all out of the question if they are the right choice. Battery systems today will wear out faster than that, but that may not be the case in the future. Bodies and interiors will still wear out as they do today, though they will be cleaned and maintained better.

If you look at the no-dashboard layout of the Google prototype, you can also see a path to that being simpler and lasting longer. Fewer parts means easier maintenance and longer life.

In general, you can get a longer lifetime by paying more, and that usually decreases your depreciation cost per mile -- ie. paying double more than doubles the miles, though the time value of money must be accounted for. On the other hand, older is usually less valued, even when fully functional and even when the electronics are replaced. The "sweet spot" of cost and lifetime is yet to be revealed.

### Electronics go obsolete faster?

Some parts of the car need a shorter lifespan. The computers, sensors and electronics will be improving on the Moore's law curve. Nobody wants a 5 year old cell phone, and so it's a good thing that robotaxis will wear out faster -- or at least may be designed so their electronic parts can be cheaply swapped out every few years to stay competitive.

## Cars get cheaper, way cheaper

The one person robotaxi is a very practical vehicle, and it's possible to make it much cheaper than today's cars, even with a fairly luxurious interior. The robocar sensor package is already dropping quickly in price, and will soon be under \$1,000. Like all computerized electronics, it will keep dropping. One person short range vehicles can be made very cheaply in volume. The robotaxi does not need or want a complex dashboard and fancy entertainment system. Your tablet or phone does that for you. Think more about a nice luxurious chair in a box. You're more likely to want a little fridge, or a desk than what you put in a car today. Urban cars could drop to just a few thousand dollars with mass production. Customers who care about price will demand these cheap rides. Others will demand luxury rides but they will cost less than today's \$80,000 luxury boxes.

Once the price of batteries drops -- and that's going to happen -- the electric power trains will also be cheaper than the ICE ones.

Today an UberX ride costs \$2/mile, and owning your own car costs about 50-60 cents/mile when new, dropping when the car gets older, plus parking. Robocars won't pay much for parking, and there's no reason that a robotaxi ride should not cost something similar. And a ride in a one-person \$7,000 robotaxi that lasts 500,000 miles? That's going to cost under 25 cents/mile.

The bad news here for car companies: Even if the equation says they sell more cars, they sell a lot of them for much less money, dropping the dollar volume of their business. (Maybe -- see below.)

## People share rides, or maybe not

One way the total vehicle miles in the equation could go down while the personal miles go up is if people share rides more often. This requires multi-seat robotaxis, but the success of UberPool and LyftLines, which do shared rides, suggests big potential here. Indeed, I see something much grander possible at rush hour, which I will describe in my forthcoming article on the future of transit.

Robotaxis for sharing could be much better than what we have now. Even in the traditional car form factor you could see a car with a divider so each passenger has their own private space, not even needing to see the other rider. With good ride coordination people never go far out of their way, and with multiple robotaxis, people never go any distance out of their way ever, but do have to change taxis once or twice in 30 second switch-offs. The potential for very pleasant ride-share service is there, and that could bump vehicle occupancy a lot and thus reduce the top of the equation, and the number of cars made.

But there's a snag, and it's the price point described above. Today, with UberX at \$2/mile, sharing is an attractive financial proposition. Cut your cost by 30-40% for some inconvenience is a winning offer when the cost of the ride is \$10 or especially \$50 like my recent airport ride.

But if the cost is 30 cents/mile and your trip is 5 miles, are you going to accept any hassle to reduce the \$1.50 cost to \$1 or even \$0.50? It's a lot less likely, though it could be likely at peak-use times when there simply aren't enough vehicles to serve the demand. Indeed, one of the advantages of making larger cars (like today's 4 passenger vehicles) is that such a fleet has much more ability to absorb peak load by encouraging and eventually requiring pleasant efficient sharing. While it's more expensive to build and run a 4 seat car than a 1 seat car, it isn't 4 times as expensive, so the likely fleet does not have the perfect mix of vehicle sizes you might otherwise choose.

### Delivery robots reduce shopping trips

You may recall that I am working at Starship Technologies on delivery robots. These delivery robots will be super efficient in energy and road use. Some estimates suggest that 30% of trips today are shopping trips, and we could put a real dent in that, along with the general move to online shopping and delivery. After all, a UPS truck full of Amazon packages is, in a way, people sharing the ride.

## But far more people now can afford private car transportation

Of the factors above, sharing rides and making longer-lived cars could reduce the number of cars needed, and the reduction in car cost reduces the total the world spends on cars (as well as the energy required to build them.) Perhaps those factors might counter the additional travel and the empty miles.

One factor will overwhelm all of this, however. Cheap robotaxi service under 50 cents/mile will suddenly make personal car transportation economically accessible. Drop to 30 cents/mile or even 10 cents/mile in poorer economies, and we're talking vastly more accessible to billions of new people. The market may already be mostly saturated in the United States which has vast car ownership, but the global average is about 15%. It's going to grow, and by a lot. The car industry is facing a boom, not a bust from this technology.

This may sound like a nightmare to those who blame private cars for many of our environmental and urban woes. Fortunately the picture is not quite the same with these cars which are far more likely to be efficient, low-emitting and sustainable, indeed more sustainable than the transit systems we use today. (Indeed, they could be combined with a new vision of even more sustainable transit during peak times.)

## The parking story is good, though

While I have said this in other places it is worth noting that while car sharing does not reduce the number of cars on the road, it vastly reduces the amount of parking needed, in fact in many places reduces it to zero, and that's good news for everybody.

One reason why car sharing companies like Zipcar have published statistics such as "Each zipcar replaces 12 cars" -- leading people to the false conclusion that robocars shrink the size of the car industry -- is that Zipcar sucks. What I mean is not that it's a bad product, but compared to robotaxi service (or even services like Car2Go, DriveNow or Uber) it's terrible. Trips in a typical carshare car discourage car use, because they make it inferior in two ways. First, they have the hassle of going to get the car, and returning it to the same spot, and they make you think about your car travel by the hour so that you understand its real cost. This means you are very unlikely to sign out a zipcar to do a short shopping errand. It's good for people to understand the cost of what they do, and probably good for cities, but these principles just won't apply to the low cost robotaxi.

### Demand rises when cost falls

It is reasonable to assume that demand for miles driven in vehicles will go up as the cost drops and convenience increases. And that sharing will be less as the cost drops making it more convenient and probably more pleasant to ride alone instead of with strangers.

The conclusion is that there will be less actual cars at any time. But they will overall have a much shorter life and be replaced a lot faster.

It would be interesting to calculate the estimated cost (or car manufacturer profit) per mile of the car itself pre and post robotic cars. And then apply that to the current and estimated future number of miles driven. That would model whether there will be more potential profits or less in the robotic car world. It won't of course tell us whether the current manufactures will capture that profit or if will be divided across them and some new entrants (Google, Apple, Tesla et al.)

I would suggest that car manufacturing will continue to be a profitable industry. I would also suggest that manufacturers of larger mass transit vehicles will loose business if people move from public mass transit to private mass transit.

### Countering Marchetti's constant

As someone who comments fairly regularly on environmental blogs, it is interesting looking at the confusion robocars are causing environmentalists. On one hand, robocars offer smaller, lighter electrically powered transport with ride sharing efficiency improvements, yet on the other hand, they also could greatly increase car travel (by making it more pleasant), and encourage people to abandon traditional public transport and return to using cars. It is going to be interesting watching how this debate develops.

If increasing the energy efficiency of a cities inhabitants becomes more important in the future, then finding ways to get the best environmental outcome from robocars may become a major issue. The best model seems to be encouraging ride sharing taxi services rather than traditional private car ownership and encouraging lightweight electrically powered vehicles.

But there may also be another way to counter the adverse outcome of people driving greater distances because it is more pleasant and cheap. As this technology offers to make road pricing practical, instead of traditional fixed vehicle registration, it also may offer the opportunity of variable pricing that subsidises travelling shorter distances by charging a higher rate for longer distance travel. A small flag fall fee encourages walking or riding very short distances. Then if the first say 8 miles was required to be charged at half the rate of subsequent miles, then the effect is a tax on decisions that encourage congestion and more wasteful travel.

Time is generally the limiting factor on how far a person will travel when looking at new jobs etc.. Unfortunately the effect of a new faster commute has traditionally been people over time traveling further until a new traffic congestion equilibrium is reached (Marchetti's constant is a term used to describe the maximum time people are normally willing to travel daily). A system of variable pricing based on distance has the potential of breaking this tradition.

### Not so constant

We can see some things chipping away at the constant. For example, big tech companies in silicon valley run bus systems for employees. Many employees of companies like Google have taken to living in San Francisco, which involves almost an hour bus ride each way at rush hour. So many that there are protests against them, since they have raised real estate prices and gentrified some areas.

The employees get on a high end bus with desks, wifi and co-workers, and it takes them directly to the company HQ with few stops and no changes. Many feel they start work when they get on the bus. It is a taste of the future, one that suggests longer commutes. (At the same time, vast numbers of Google employees live in Mountain View and bicycle commute to work. Google has the lowest single occupancy commuter ratio of any suburban company around.)

Yes, road charging is an answer -- and I have other answers at this article. For now, road charging is not politically easy, because it means roads that everybody paid to build are for the rich and not the poor.