The recent Federal Automated Vehicles Policy is long. (My same-day analysis is here and the whole series is being released.) At 116 pages (to be fair, less than half is policy declarations and the rest is plans for the future and associated materials) it is much larger than many of us were expecting.

The policy was introduced with a letter attributed to President Obama, where he wrote:

There are always those who argue that government should stay out of free enterprise entirely, but I think most Americans would agree we still need rules to keep our air and water clean, and our food and medicine safe. That’s the general principle here. What’s more, the quickest way to slam the brakes on innovation is for the public to lose confidence in the safety of new technologies. Both government and industry have a responsibility to make sure that doesn’t happen. And make no mistake: If a self-driving car isn’t safe, we have the authority to pull it off the road. We won’t hesitate to protect the American public’s safety.

This leads in to an unprecedented effort to write regulations for a technology that barely exists and has not been deployed beyond the testing stage. The history of automotive regulation has been the opposite, and so this is a major change. The key question is what justifies such a big change, and the cost that will come with it.

Make no mistake, the cost will be real. The cost of regulations is rarely known in advance but it is rarely small. Regulations slow all players down and make them more cautious -- indeed it is sometimes their goal to cause that caution. Regulations result in projects needing "compliance departments" and the establishment of procedures and legal teams to assure they are complied with. In almost all cases, regulations punish small companies and startups more than they punish big players. In some cases, big players even welcome regulation, both because it slows down competitors and innovators, and because they usually also have skilled governmental affairs teams and lobbying teams which are able to subtly bend the regulations to match their needs.

This need not even be nefarious, though it often is. Companies that can devote a large team to dealing with regulations, those who can always send staff to meetings and negotiations and public comment sessions will naturally do better than those which can't.

The US has had a history of regulating after the fact. Of being the place where "if it's not been forbidden, it's permitted." This is what has allowed many of the most advanced robocar projects to flourish in the USA.

The attitude has been that industry (and startups) should lead and innovate. Only if the companies start doing something wrong or harmful, and market forces won't stop them from being that way, is it time for the regulators to step in and make the errant companies do better. This approach has worked far better than the idea that regulators would attempt to understand a product or technology before it is deployed, imagine how it might go wrong, and make rules to keep the companies in line before any of them have shown evidence of crossing a line.

In spite of all I have written here, the robocar industry is still young. There are startups yet to be born which will develop new ideas yet to be imagined that change how everybody thinks about robocars and transportation. These innovative teams will develop new concepts of what it means to be safe and how to make things safe. Their ideas will be obvious only well after the fact.

Regulations and standards don't deal well with that. They can only encode conventional wisdom. "Best practices" are really "the best we knew before the innovators came." Innovators don't ignore the old wisdom willy-nilly, they often ignore it or supersede it quite deliberately.

What's good?

Some players -- notably the big ones -- have lauded these regulations. Big players, like car companies, Google, Uber and others have a reason to prefer regulations over a wild west landscape. Big companies like certainty. They need to know that if they build a product, that it will be legal to sell it. They can handle the cost of complex regulations, as long as they know they can build it.

Some people have wondered about my forecast in the spreadsheet on Robotaxi economics about the very low parking costs I have predicted. I wrote about most of the reasons for this in my 2007 essay on Robocar Parking but let me expand and add some modern notes here.

The Glut of Parking

Today, researchers estimate there are between 3 and 8 parking spots for every car in the USA. The number 8 includes lots of barely used parking (all the shoulders of all the rural roads, for example) but the value of 3 is not unreasonable. Almost all working cars have a spot at their home base, and a spot at their common destination (the workplace.) There are then lots of other places (streets, retail lots, etc.) to find that 3rd spot. It's probably an underestimate.

We can't use all of these at once, but we're going to get a great deal more efficient at it. Today, people must park within a short walk of their destination. Nobody wants to park a mile away. Parking lots, however, need to be sized for peak demand. Shopping malls are surrounded by parking that is only ever used during the Christmas shopping season. Robocars will "load balance" so that if one lot is full, a spot in an empty lot too far away is just fine.

Small size and Valet Density

When robocars need to park, they'll do it like the best parking valets you've ever seen. They don't even need to leave space for the valet to open the door to get out. (The best ones get close by getting out the window!) Because the cars can move in concert, a car at the back can get out almost as quickly as one at the front. No fancy communications network is needed; all you need is a simple rule that if you boxed somebody in, and they turn on their lights and move an inch towards you, you move an inch yourself (and so on with those who boxed you in) to clear a path. Already, you've got 1.5x to 2x the density of an ordinary lot.

I forecast that many robotaxis will be small, meant for 1-2 people. A car like that, 4' by 12' would occupy under 50 square feet of space. Today's parking lots tend to allocate about 300 square feet per car. With these small cars you're talking 4 to 6 times as many cars in the same space. You do need some spare space for moving around, but less than humans need.

When we're talking about robotaxis, we're talking about sharing. Much of the time robotaxis won't park at all, they would be off to pick up their next passenger. A smaller fraction of them would be waiting/parked at any given time. My conservative prediction is that one robotaxi could replace 4 cars (some estimate up to 10 but they're overdoing it.) So at a rough guess we replace 1,000 cars, 900 of which are parked, with 250 cars, only 150 of which are parked at slow times. (Almost none are parked during the busy times.)

Many more spaces available for use

Robocars don't park, they "stand." Which means we can let them wait all sorts of places we don't let you park. In front of hydrants. In front of driveways. In driveways. A car in front of a hydrant should be gone at the first notification of a fire or sound of a siren. A car in front of your driveway should be gone the minute your garage opens or, if your phone signals your approach, before you get close to your house. Ideally, you won't even know it was there. You can also explicitly rent out your driveway space for money if you wish it. (You could rent your garage too, but the rate might be so low you will prefer to use it to add a new room to your house unless you still own a car.)

In addition, at off-peak times (when less road capacity is needed) robocars can double park or triple park along the sides of roads. (Human cars would need to use only the curb spots, but the moment they put on their turn signal, a hole can clear through the robocars to let them out.)

So if we consider just these numbers -- only 1/6 of the time spent parking and either 4 times the density in parking lots or 2-3 times the volume of non-lot parking (due to the 2 spots per car and loads of extra spots) we're talking about a huge, massive, whopping glut of parking. Such a large glut that in time, a lot of this parking space very likely will be converted to other uses, slowly reducing the glut.

Ability to move in response to demand

To add to this glut, robocars can be the best parking customers you could ever imagine. If you own a parking lot, you might have sold the space at the back or top of your lot to the robocars -- they will park in the unpopular more remote sections for a discount. The human driver customers will prefer those spots by the entrance. As your lot fills up, you can ask the robocars to leave, or pay more. If a high paying human driver appears at the entrance, you can tell the robocars you want their space, and off they can go to make room. Or they can look around on the market and discover they should just pay you more to keep the space. The lot owner is always making the most they can.

If robocars are electric, they should also be excellent visitors, making little noise and emitting no soot to dirty your walls. They will leave a tiny amount of rubber and that's about it.

The "spot" market

All of this will be driven by what I give the ironic name of the "spot" market in parking. Such markets are already being built by start-ups for human drivers. In this market, space in lots would be offered and bid for like any other market. Durations will be negotiated, too. Cars could evaluate potential waiting places based on price and the time it will take to get there and park, as well as the time to get to their likely next pickup. A privately owned car might drive a few miles to a super cheap lot to wait 7 hours, but when it's closer to quitting time, pay a premium (in competition with many others of course) to be close to their master.

The vision of many of us for robocars is a world of less private car ownership and more use of robotaxis -- on demand ride service in a robocar. That's what companies like Uber clearly are pushing for, and probably Google, but several of the big car companies including Mercedes, Ford and BMW among others have also said they want to get there -- in the case of Ford, without first making private robocars for their traditional customers.

In this world, what does it cost to operate these cars? How much might competitive services charge for rides? How much money will they make? What factors, including price, will they compete on, and how will that alter the landscape?

Here are some basic models of cost. I compare a low-cost 1-2 person robotaxi, a higher-end 1-2 person robotaxi, a 4-person traditional sedan robotaxi and the costs of ownership for a private car, the Toyota Prius 2, as calculated by Edmunds. An important difference is that the taxis are forecast to drive 50,000 miles/year (as taxis do) and wear out fully in 5 years. The private car is forecast to drive 15,000 miles/year (higher than the average for new cars, which is 12,000) and to have many years and miles of life left in it. As such the taxis are fully depreciated in this 5 year timeline, and the private car only partly.

Some numbers are speculative. I am predicting that the robotaxis will have an insurance cost well below today's cars, which cost about 6 cents/mile for liability insurance. The taxis will actually be self-insured, meaning this is the expected cost of any incidents. In the early days, this will not be true -- the taxis will be safer, but the incidents will cost more until things settle down. As such the insurance prices are for the future. This is a model of an early maturing market where the volume of robotaxis is fairly high (they are made in the low millions) and the safety record is well established. It's a world where battery prices and reliability have improved. It's a world where there is still a parking glut, before most surplus parking is converted to other purposes.

Fuel is electric for the taxis, gasoline/hybrid for the Prius. The light vehicle is very efficient.

Maintenance is also speculative. Today's cars spend about 6 cents/mile, including 1 cent/mile for the tires. Electric cars are expected to have lower maintenance costs, but the totals here are higher because the car is going 250,000 miles not 75,000 miles like the Prius. With this high level of maintenance and such smooth driving, I forecast low repair cost.

Parking is cheaper for the taxis for several reasons. First, they can freely move around looking for the cheapest place to wait, which will often be free city parking, or the cheapest advertised parking on the auction "spot" market. They do not need to park right where the passenger is going, as the private car does. They will park valet style, and so the small cars will use less space and pay less too. Parking may actually be much cheaper than this, even free in many cases. Of course, many private car owners do not pay for parking overtly, so this varies a lot from city to city.

(You can view the spreadsheet directly on Google docs and download it to your own tool to play around with the model. Adjust my assumptions and report your own price estimates.)

The Prius has one of the lowest costs of ownership of any regular car (take out the parking and it's only 38 cents/mile) but its price is massively undercut by the electric robotaxi, especially my estimates for the half-width electric city car. (I have not even included the tax credits that apply to electric cars today.) For the taxis I add 15% vacant miles to come up with the final cost.

The price of the Prius is the retail cost (on which you must also pay tax) but a taxi fleet operator would pay a wholesale, or even manufacturer's cost. Of course, they now have the costs of running a fleet of self-driving cars. That includes all the virtual stuff (software, maps and apps) with web sites and all the other staff of a big service company ranging from lawyers to marketing departments. This is hard to estimate because if the company gets big, this cost will not be based on miles, and even so, it will not add many cents per mile. The costs of the Prius for fuel, repair, maintenance and the rest are also all retail. The taxi operator wants a margin, and a big margin at first, though with competition this margin would settle to that of other service businesses.

At this week's Singularity U Global Summit, I got a chance to meet with Josh Silver and learn about his organization, represent.us. I have written often in My New Democracy Category on ways to attack the corruption and money in politics. Represent.us is making a push for the use of laws to fix some of these issues, through ballot propositions.