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Robotaxi companies like Cruise, Waymo, Baidu seek scale

Robotaxis operate like ride-hailing services. Both incorporate data analytics to determine where rides will be needed, maximizing the utilization of their platforms. Customers hail them via apps. The similarities end there.

“It is an entirely different business than ride-hailing,” said Alisyn Malek, CEO of consulting firm Middle Third and former COO of self-driving tech startup May Mobility.

Unlike Uber and Lyft, which rely on independent drivers who own and maintain their own vehicles, robotaxi providers must account for vehicle ownership and maintenance costs, whether they absorb themselves or partner with fleet management companies.

That business is inclined to conventional taxi providers, something software-minded investors may underappreciate. Still, robotaxi providers might eventually offer cheaper fares and improve operator margins from the human-driven taxi model.

Autonomous taxis carry a cost between $1.42 and $2.24 per mile for operators, while conventional taxis run at $3.55 per mile, according to a September 2021 Environmental Research Letters report that analyzed both businesses using San Francisco as a case study.

And yet the “pathway to profitability is challenging, at best,” said Ashley Nunes, one of the study’s authors. Autonomous taxi operators need utilization rates as high as 78 percent and must persuade reluctant consumers to pool rides to achieve those margins.

Even then, variables exist. Removing human drivers may result in cost savings, but self-driving fleet operators must hire employees to monitor robotaxis on the road. Companies are tight-lipped on how many vehicles a single operator may monitor, and no regulations exist governing the practice. The ratio of these “teleoperators” to vehicles may have a substantial impact on operating margins, Kampshoff said.

A 2022 McKinsey study suggests the per-mile costs of operating a robotaxi may fall by more than 50 percent between 2025 and 2030 as fleet operators improve back-end operations, utilize purpose-built autonomous vehicles, optimize insurance costs and reduce hardware expenses with the the price of high-performance chips is declining.

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