The Impact of Autonomous Taxis

October 31, 2017

A taxi service based on the autonomous electric vehicle will explode in market share in any city that it starts up in. The reason for this is that the cost to the service provider is vastly lower on a per kilometre basis than for the equivalent service in a petrol driven car, and Incredibly lower then the cost of a human driven taxi.

This means that the autonomous taxi company can charge prices that are way less than the cost of a normal human driven taxi, but they will still be making Supernormal profits which can be plowed back immediately into the rapid expansion of their business right across the city and into other markets. These Supernormal profits will exist for as long as it takes for any other autonomous electric taxi operator to similarly get established and get into a competitive position. In reality the first mover advantage in any city is virtually winner-takes-all, because it will be near impossible for a competitor to come in 12 to 18 months later and take enough market share to enable them to expand. It will be possible with vast financial backing, but it will be difficult and risky.

What this means is that in most cities in the Western world an autonomous electric taxi service will seem to explode into operation, and their biggest problem for a long time will be simply how to scale up as fast and as reliably as possible. What will happen is that the operator who starts up in one city will obviously learn a tremendous amount from the experience and will be able to carry this experience over to the next city and so on.

By the time the first electric autonomous taxis arrive in New Zealand, the service model will have been well and truly proven, as will the fleet safety record which is expected to be 9 or 10 times safer than human driven vehicles. This will present a real quandry to the regulators in New Zealand, because in actual fact they would love for transport to be using the vastly safer autonomous vehicles, plus they would love to see a lot of parking spaces freed up given that the normal household is vehicle is parked for 95% of the day. The regulators will also be well aware that being driven around by autonomous taxi is far lower cost and far safer and more convenient than owning and driving your own car, and so they will be well aware that autonomous taxi and reduction means a significant boost to the economy by putting money back into the pockets of every vehicle driving commuter.

On the downside regulators will be very aware that autonomous taxis and autonomous trucks and rigs will also mean that a very large number of drivers will become unemployed virtually overnight. While out of necessity they will see this is a necessary evil for the greater good they will also need to plan for this in exquisite detail. However, who will clean up the vomit from the autonomous taxis?