How much do Uber and Lyft drivers need to fear robotaxis?
First, it was the ride-share industry that disrupted traditional taxis. Now robotaxis are trying to disrupt the ride-share companies.
You can already ride in a driverless taxi in some American cities, with others, including D.C., moving closer to also legalizing them. But as Americans watch closely to see if and how AI might take over jobs, are ride-share drivers right to worry about the driverless taxis cutting into their livelihoods?
A new study suggests probably not, at least not any time soon.
A study conducted in part by University of Maryland Business School Professor Tunay Tunca looked at both sectors of that industry, in the United States and abroad. It finds that the original disruptors, the ride-share companies, continue to operate with two advantages over the robotaxi industry seeking to replace drivers. Both advantages focus on the age-old law of supply and demand.
“When it comes to robot taxis, for instance, what they need to do is they need to build new cars — like way more,” Tunca said. That takes a lot of time to build and a lot of money to buy them. For ride-share companies, “to boost their supply, all they have to do is essentially incentivize the drivers a little bit more.”
And what’s the second advantage?
Ride-share platforms “don’t take as much risk, or, almost no risk,” Tunca said. They “don’t need to spend their own money, like hundreds of thousands of dollars, to get the extra cars. All they have to do is adjust their percentage, like commission, and then their supply increases. So this makes them much more robust.”
He said that while Uber and Lyft prices typically vary at any moment, the driverless taxis tend to have lower prices. But just beating ride-shares on cost isn’t enough when factoring in all the other expenses robotaxis have.
“Uber is not investing their own capital purchasing cars,” Tunca said. “All they’re doing is providing a platform, right? The drivers have those costs, so they’re (Uber, Lyft, and others) not actually risking their own money.”
The study argues that even if ride-share companies charge more in fares than the autonomous taxis do, their agility and ability to respond quickly, without losing money on cars that are just sitting idle, is what will set them apart. That advantage holds unless robotaxis can knock fares down to about half what ride-share companies charge. Tunca said it’s unlikely that would happen in the next five to 10 years.
“It’s going to be very difficult for a robot taxi company to completely uproot and replace a company like Uber or Lyft,” he said. “It’s going to be extremely difficult to put them out of business, because they can always expand capacity fast without putting their own money into purchasing cars.”
“Uber and Lyft might be making less profit” if ride-share companies get aggressive,” Tunca said. “But they will still be viable and they will survive.”