The Future of Urban Mobility: America’s AV Winners

By Ross Douglas, Founder & CEO, Autonomy

The Future of Urban Mobility Series: Part II

When will robo-taxis start operating commercially in US cities? There is no better person to ask than Timothy Papandreou, formerly Waymo Strategic Partnerships: We’re seeing them now with Waymo in a part of Metro Phoenix, AZ, and they announced a fully self-driving paid service will be available later this year. It was exciting working with all the teams on that project. In the near future there will be more cities with these services.”

If it’s a case of ‘when and not if’ for AVs in America, then who is set to gain most?

Champions of the Third Space

The US Department of Transport’s Volpe Center calculated that in 2015 Americans spent 84 billion hours gripping a wheel and staring at the road. That’s an hour per day for the average driver. Where would all that attention go if we no longer have to follow the advice of Jim Morrison in Roadhouse Blues; “Keep your eyes on the road, your hand upon the wheel”?

According to the Bureau of Labor Statistics, Americans spend an average of 50 mins per day on Facebook, more than any other leisure activity, with the exception of watching television and movies (2.8 hours per day). It’s more time than people spend reading (19 minutes), participating in sports or exercise (17 minutes), or social events (four minutes). It’s almost as much time as people spend eating and drinking (1.07 hours).

Should AVs take over, then potentially 84 billion hours of new screen time, undisturbed by the pressures of home and work, could be up for grabs. That can only be good news for Google, Amazon, Facebook, Netflix and a bunch of smaller players like Bloomberg, LinkedIn and video gaming companies.

Facebook, and their Instagram and messaging platforms, own the lion’s share of our screen time. The more time we spend on their sites enables them to learn more about our habits and interests and better target the ads they feed us. In the future, they will use their VR knowledge gained from Oculus and the content generated on Instagram to create VR experiences that are even more enticing.

Google has invested heavily in Waymo to pioneer on-demand AVs, but their revenue streams would not be limited to the taxi fare. Google Assistant, Chrome, Waze and YouTube could have a captive audience for their advertising. You tell your AV where to go and Waze’s ‘location-based advertising platform’ suggests you stop at Starbucks for a coffee. No need for radio or music when your eyes are free to catch the latest videos on YouTube.

Amazon is the world’s top spender on Google ads, with the bulk of its $2.7 billion marketing budget directing users to their websites.The Amazon purchase pathway will be particularly effective in an AV as the 20 or 30-minute ride allows enough time for the consumer to receive ads, read reviews and buy, before the brain has time to give the purchase a second thought.

Netflix has an $8 billion content budget for 2018, is valued at over $100 billion and will lose between $3 and $4 billion in 2018. Their subscription model means they need to find new users or up the existing subscription fee. Last year Netflix gained 24 million users bringing the total to over 100 million and increased its subscription fee by 10% which was in line with the increased average user screen time. Widespread AV adoption in the US would encourage new users and justify higher subscription fees.

Who will win the Robotaxi race?

Three factors will determine who will be the first company to sell an AV ride: AI, mass production of vehicles and good city relationships. What we have learnt in the last few years is that these are very distinct and difficult things to achieve. Google’s Waymo might be leading with AV technology, but who will produce their vehicles and, more importantly, how will they get the authority from hundreds of cities to launch simultaneously when they don’t have those relationships? Will Softbank encourage Uber and Didi Chuxing to merge so as to avoid a price war? Will cities ban privately owned AVs to reduce driverless congestion?

The US will be early adopters of AVs but it is not clear whether Americans will give up car ownership to use robo-taxis or upgrade to owning their own fully autonomous vehicle. Americans have been buying progressively bigger SUVs, choosing status over thrift. Automakers do a great job of selling image and consumers are prepared to pay massive premiums for status.

There are other complications too. Americans have recently discovered the joys of active mobility with bike and e-scooter companies taking off. We see in San Francisco the rapid adoption of e-scooter companies such as Lime and Bird, which are now expanding to the East Coast thanks to significant funding rounds. AVs find it tough to handle the unpredictability of cyclists and other mobility device users. If cities designate roads to different users it will polarise their voters, something politicians are understandably afraid of.

While AVs will reduce road deaths in the US they could contribute to the country’s obesity epidemic, which affects tens of millions and causes far more premature deaths than road accidents. If Americans adopt active mobility for their first and last mile commute they will double the average time spent exercising. Road space is not free and individual freedom has its limits. If wise heads prevail AVs will be a key component in a highly efficient, shared and diverse mobility landscape. This will require consistent collaboration between policymakers and innovators as the technology develops. City officials have the power to pick a variety of mobility solutions without dipping into the coffers. The winners will be cities that choose a mix of mobility solutions that keep their commuters active, moving and on the streets.

This article is the third in Autonomy’s four-part series The Future of Urban Mobility, which explores where mobility is headed in the world’s biggest markets. The next entry takes us to Europe shifting out of the car lane and into the bike lane. 

Read The Introduction: Five Key Insights

Read Part I: China’s Electric Horizon

Read Part III: Can Europe Stay on Top?