The Real Winners in the Race for Fully Autonomous Cars
Photo by Jonnelle Yankovich on Unsplash
For companies developing self-driving vehicles, the road to fully autonomous is rife with hurdles, both financial and technological. It’s expensive to bankroll the hardware, software development, data infrastructure, manufacturing, and, after a service is launched to the public market, the maintenance, remote service, charging, and insurance cost. It’s also yet to be determined whether generating $10-15 per ride is enough to offset these fixed and variable costs. Based on these hurdles and unknowns, it is my opinion that the real winners in the race for autonomous vehicles will neither be the car manufactures nor the service providers, but rather the companies that stand to most benefit from people having more free time in their day’s: companies such as Google, Apple, Facebook, Netflix, Disney, Tiktok. Companies that will “win” the self-driving race in terms of generating more revenue will be the companies that are in the business of commoditizing our free time and attention.
- Time is money
- Free time equates to more content consumption
- The winners of the Self Driving Revolution
- So how can AV and ride-share companies also commoditize our free time?
Time is money
Imagine your total daily commute to work is 20-30 minutes long. Normally, you would have to focus all your attention during that time to driving: paying attention to the road and not being distracted while driving. But now imagine you have an extra 20-30 minutes of free time during your day, what would you be doing?
Granted, some people may choose to spend that extra time working, catching up on emails, etc. However, others may spend that extra 30 minutes per day on Youtube, Netflix, Facebook, Instagram, or perhaps shopping online and browsing other sites. The time that you spend on these sites directly benefits these companies, either through subscription services or ad revenue.
Free time equates to more content consumption
In 2020, the Covid-19 pandemic forced millions of people to work from home. This offered many of us to get back the time otherwise spent commuting, or getting ready in the morning. During this same period of time, we saw huge increases in content consumed. In 2020, Netflix had a record 37 million new paid members join their service.
A study of Nielsen data showed that the total amount of streaming minutes almost doubled from 2019 to 2020. Granted, some of this increase is not just accounted for by eliminating commutes; almost every social activity was eliminated during the “stay at home” orders. I believe that this trend is an overall representation of that as we get more free time for ourselves, we increase our consumption of content. Whether that’s in the form of shows on Netflix, or just browsing through Twitter and various sites, part of the free time we get back through efficiencies is used for the consumption of content. This is the basis of my opinion that content providers view our time as a commodity and an opportunity for monetization.
The Winners of the Self Driving Revolution
Even though companies like Cruise, Tesla, and Zoox are spending billions to develop technologies that can give us back time in our days, they will not be able to capitalize on our time. In fact, they did all the heavy lifting to let companies that make money by commoditizing our time, such as Google, Apple, Facebook, and Netflix, step in and reap the rewards without having to spend nearly as much.
Much like the airline industry, the worst-case scenario for AV companies is a “race to the bottom”, where each rideshare company tries to slash its prices so customers will use its service over competitors. These AV companies will face huge costs of operating and maintaining fleets of thousands of vehicles. Insurance costs, cleaning costs, charging costs, data storage center costs, maintenance and repair costs, all taken out of just $15-20 per ride leaves very little room for profits. Disney on the other hand has $0 of cost added but can now try and profit from that 20-minute commute getting you and me to stream more content. Or Google can now use that 20 minutes, usually spent focused on driving, to deliver us more ads while we now use their browser.
So how can AV and Ride Share companies also commoditize our free time?
I believe they can’t unless they also control the platforms used to deliver content. For example, whenever you and I use our iPhone to watch Youtube, Netflix, or Hulu, Apple gets a hefty commission. Right now, the highways that we use to get content are heavily monopolized by two companies: Apple and Google. Anything that generates revenue and is delivered through the App Store or Google Store has to pay a commission to Apple and Google, respectively. This parasitic relationship was most evident when Fortnite sued Apple for taking it off the iOS App Store because they felt it was unfair to give Apple a 30% commission of all purchases made through the Fortnite app.
So maybe, with the recent news that Apple is partnering with Kia and Hyundai to make an autonomous car, the most profitable autonomous car companies may not be Cruise, Tesla, Zoox, Uber, Lyft, Ford, or Pony AI, but rather Waymo (which is Google’s self-driving car) and Apple. Not only can they create a technology that can give us time back in our days, but they can also use that time they have given us to deliver more content through their platforms.
1st place goes to those who own the metaphorical roads used to deliver content. 2nd place goes to actual content providers: Netflix, Disney Plus, Tiktok, Snapchat, Twitter, Facebook, other online sites. Dedicated AV companies, such as Cruise, who did all the hard work and heavy lifting, may struggle to reach profitability as Apple and Google come in and say, “Thanks, we’ll take it from here” unless they can take control of how content is delivered in their vehicles.