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Late last night and early this morning, I wrote an article outlining one big reason robotaxis won’t replace car ownership to a very significant degree. There’s another big reason, sort of related to that, that a reader pointed out and explained well, and some other readers backed up in additional ways.

First of all, here’s the full comment from longtime reader “Defendor” on a glaring issue I didn’t even touch on in my article (though, he emphasized with bolding different points than I want to emphasize):

“We already have human driven ride hailing services, and in several major centers they have been joined by self driving cars. So far they are charging slightly more for self driven Waymo, than the Human driven Uber, so they aren’t really disrupting anything on price yet.

“Does anyone really expect dramatic reductions? Right now the human Uber driver is also paying for buying the car, insuring the car, maintaining the car, fueling the car, cleaning the car, storing the car… Right now with human ride hailing, Uber just takes a hefty share of ride revenue, and push all the costs onto the drivers.

“Remove the driver, and then the company needs to actually buy the cars, pay for maintenance, pay for insurance, pay for fueling, have staff to clean the cars, etc…

“I’m really not expecting dramatically lower pricing. On top of assuming all the costs now covered by the human drivers, that will need to be assumed. The self driving tech companies will all want returns on their massive investments in self driving technology. IMO, any savings from getting rid of human drivers will mostly go to profits for the tech companies, not much lower fares for passengers.

“Where I think the cost per mile tilts to ride hailing, instead of personal car ownership, is probably where it’s already does if people crunched the numbers.

“That would be people that drive far fewer miles/year than average. If you are buying a car and driving 4000 miles/year, your cost per mile is MUCH higher than someone that drives 16000 miles per year, and might be close to where ride hailing is less expensive than car ownership.

“I don’t expect that this will dramatically change car ownership in the foreseeable future.”

My article focused on the extra driving and thus extra costs that come with robotaxi (or taxi) service. But, yes, there’s also this:

“Right now the human Uber driver is also paying for buying the car, insuring the car, maintaining the car, fueling the car, cleaning the car, storing the car.“

This is huge! People keep thinking about self-driving tech replacing human drivers and all the costs associated with them, but especially due to the ride-hailing app revolution, the costs of the car itself are currently covered by the human! Uber, Lyft, and others squeeze profits out of rides with minimal capex or even operational expenses. The humans struggling to make a living probably don’t want to do a full cost-revenue analysis. Studies have shown that all of the extra maintenance cost, fuel cost, depreciation cost, etc. mean that Uber and Lyft drivers are really just scraping by. So, yes, a robotaxi company will be able to eliminate driver costs, but they’ll need to start covering:

• the cost of the vehicle
• car insurance
• vehicle maintenance
• vehicle fuel/electricity
• cleaning the car
• storing the car

Again, these are costs that humans in the “gig economy” are taking on while getting paid relatively poor wages. Since these people already have a place to park their car, have insurance (though, this increases with miles driven and when providing ride-hailing service), and have the car for their own use, there are some advantages the gig economy drivers even have over a company using the vehicle only for commercial purposes.

I co-owned and ran a city-to-city and airport shuttle service in Europe. These are all things that one has to manage — they take time and money. Robotaxis mean a shift from the Uber model of having underpaid employees doing all of this while probably not calculating the costs and realizing how poor of a deal they’re getting, to having to start covering these costs.

Then there’s the idea that people who own the self-driving cars for themselves will still cover those costs and just be sending their own vehicles out to make money for them when they don’t need the vehicles. In response to my original article about why people will still choose to own cars rather than use robotaxis, Wilber provides the following response:

“More good reasons to use your own vehicle: 1. You can keep it clean inside. Don’t have to worry about trash or raspberry jam being spread around on seats. Or possibly a virus. 2. You can keep it in good shape. Seats not worn out or stained. Dashboard that isn’t damaged or other kinds of stuff you will see in cars at a used car dealer. 3. You can control the entertainment system. The quality/fidelity of the system and the tunes played.”

You can also flip these points to explain why sending your own car out for robotaxi service may not be as popular or enticing as hyped:

• do you want to clean up the car every time a passenger or two uses it?
• do you want to deal with all of the excessive wear and tear that would come from that extra use from non-owners?
• do you want people constantly messing with your settings?
• do you want people blasting music in your car and blowing out the sound system?

Furthermore, you are most likely going to want your car at times of high demand. That’s when you’d make a lot of money sending the car out as a robotaxi. If you and 100 people in your area want to send out your cars to make extra money for you at times of low demand, how do you think that’s going to go? Are the extra miles driven and wear and tear going to be worth the pennies the robotaxi software company (e.g., Tesla) is going to pay you? Is the risk that it doesn’t come back because a drunk driver plows into it going to be worth it?

The fact of the matter is, when you look at the details, it’s hard to make the case that robotaxis will replace personal vehicle ownership to a significant degree.

As I said at the end of my other article, there are some potential cases and applications that could lead to market expansion. I’ll come back to those in another article. Also, as I said at the beginning of that last article, I still do think robotaxis will largely replace human-driven taxis. But the tech is probably not as disruptive as it’s often hyped to be. Also, even in the case of those robotaxi companies, they have a lot of investment to make back. I’ll let Defendor have the last word on this since his comment stimulated this article:

“The self driving tech companies will all want returns on their massive investments in self driving technology. IMO, any savings from getting rid of human drivers will mostly go to profits for the tech companies, not much lower fares for passengers.”