General Motors Aims to Run Fleets of Self-Driving Taxis by 2019
General Motors aims to launch a public ride-sharing service across several cities that uses fully self-driving cars by 2019, potentially becoming the first traditional carmaker to deploy autonomous technology at scale in the real world.
Describing self-driving cars as “the biggest thing since the internet”, the company said it expected to make profit offering rides to the public for as little as a mile.
Carmakers are racing to develop self-driving cars to use in fleets of robo-taxis in order to tap into a potentially lucrative new market and gain first-mover advantage over rivals in an industry that McKinsey says will be worth .5tn by 2030.
But companies face stiff questions over how to make profits from such a cost-conscious service, which also sees them move beyond their traditional skills by running a network that matches customer demand with available cars, and is likely to see carmakers themselves assume significant costs such as vehicle depreciation.
GM said it had not yet decided whether to offer its own service or use a partner such as Lyft, the ride-booking app in which GM invested 0m during 2015. In setting a 2019 start date for its service, GM has claimed a lead over some of its closest competitors. The date is two years before arch-rival Ford intends to bring a self-driving car to market, and the same year that Uber will begin buying vehicles with self-driving potential from Volvo Cars to use in its own on-demand service.
Toyota intends to have self-driving taxis in service for the Tokyo Olympics in 2020, while the Renault-Nissan Alliance, the world’s largest carmaker, plans for an autonomous ride-hailing service by 2022. Waymo, which uses Fiat Chrysler vehicles decked out with Waymo’s autonomous technology, will launch autonomous vehicles without safety drivers to the public in the coming months but does not make its own cars and has not detailed plans to shift the service beyond Phoenix, Arizona.
“GM likely recognises the opportunity to establish leadership by committing to this very specific short-term goal,” said Jessica Caldwell, an executive director at Edmunds, the automotive information group. “Autonomy presents a massive opportunity but, until this point, the space has been somewhat riddled with hazy promises.” GM said current ride-operators such as Uber or Lyft charge about - a mile, with three-quarters of the cost spent on the driver. Once the human is removed, the cost of usage will fall significantly, the group predicted.
GM’s chief financial officer, Chuck Stevens, said: “There’s a very real potential that this business is bigger than our current business — at better margins and higher returns.” While GM’s current vehicles, which cover the Chevrolet, Cadillac and Buick brands among others, have average earnings of ,000 for the company over their lifetime, the company expects ride-sharing vehicles to earn several hundred thousand dollars, as consumers pay for usage.
However, if it chooses to operate the fleet network itself the company will also face higher running costs, including recharging the vehicles and maintenance, as well as accounting for their depreciation in value. While choosing a partner to operate its network would allow GM to offset the costs, it would also see the business split profits, as well as potentially reducing the carmaker to a mere provider of “hardware”.
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