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Updated: 3 days 13 hours ago

MIT study: Even with robot drivers, ride-hailing still expensive

Thu, 05/16/2019 - 19:53

Since ride-hailing's inception, there has been a prevailing assumption about the business: Once ride-hailing networks replace expensive human drivers with competent self-driving systems, operating costs can be dramatically reduced.

Companies such as Uber and Lyft, which lose hundreds of millions today, could then find a faster path to profitability. For consumers, ride-hailing could become cheaper than conventional ownership.

That's been a key storyline, especially as Uber and Lyft made their initial public offerings this year. But a new study from the Massachusetts Institute of Technology suggests turbulent times remain for these companies in the automated future.

Even with robots behind the wheel, MIT researchers Ashley Nunes and Kristen D. Hernandez conclude that ride-hailing will still be more expensive than conventional ownership on a per-mile basis. Examining the San Francisco market, the researchers found the price for an automated taxi would range between $1.58 and $6.01 per mile vs. $0.72 for the per-mile cost of conventional vehicle ownership.

"When we started going into this work, we found there's a lot of hand-waving," Nunes told Automotive News. "There was a notion that 'All we have to do is remove the driver, assume a reduction in insurance, and there's our great number.' We said, 'Let's hold it up to scrutiny.' It didn't hold up."

It’d be easy to assume the newfound expenses of fleet ownership and maintenance, burdens that independent drivers currently bear, made the numbers worse for Uber and Lyft. Perhaps surprisingly, that's not the key contributor to the disparity.

Human-driven or autonomous, the taxi market will remain inefficient, Nunes says, because operators drive too many miles without a customer paying a fare. In San Francisco, the MIT researchers found a 52 percent utilization rate for ride-hailing and in Beijing, they say vehicles are utilized 56 percent of the time. Even if the vehicles had riders 100 percent of the time, Nunes says they'd still be unable to provide a fare that's comparable to car ownership.

Cramming more paying passengers into the cars might be one solution, something that ride-hailing companies have rolled out in the form of Uber Pool and Lyft Line. But a fundamental problem with that model, Nunes says, is that steeper discounts need to be added to incentivize carpooling. Which cuts into revenue.

Costs associated with running teleoperations, in which remote human operators can intervene when self-driving taxis encounter confusing situations, will also hurt the competitiveness of the ride-hailing fleets.

Ride-hailing companies have made automation a central element of their long-term plans to find profitability.

But Nunes says it's difficult to see that path materializing.

"Their approach with the investment folks has been, 'Trust us, we'll figure this out and it'll be this great utopia where everyone is jumping from an Uber to a scooter to an air taxi," Nunes said. "The future may well be all those things. But you need to demonstrate you can offer the service at a price point that consumers are willing and able to pay. Thus far, they are unable to do so."

Pete Bigelow

Mercedes-Benz USA chief Exler is stepping down

Thu, 05/16/2019 - 19:01

Dietmar Exler, who led Mercedes to three straight U.S. luxury sales titles before a decline this year, is said to have told the dealer board he was offered opportunities inside Daimler that would have required him to leave the U.S., which is something he didn’t want to do.

California regulator threatens ban on gasoline engines

Thu, 05/16/2019 - 17:16

California's threat -- which would be a first in the U.S. -- marks an escalation in the clash between Washington and Sacramento that would increase uncertainty for carmakers in the nation’s biggest auto market.

Longtime investor Lampert boosts stake in AutoNation

Thu, 05/16/2019 - 15:46

Former Sears CEO Eddie Lampert is accumulating AutoNation shares while Microsoft founder Bill Gates remains the dealer group's largest shareholder -- even after selling more than a million shares.

Why FCA’s U.S. expansion creates conflicting reactions in Canada

Thu, 05/16/2019 - 15:33

While Canadian suppliers are expected to benefit from FCA's recently announced investments in Michigan, concerns about Brampton heightened after the automaker cut a shift in Windsor and rival GM said it would end vehicle assembly Oshawa.

Tesla's Autopilot system was engaged during fatal crash, NTSB says

Thu, 05/16/2019 - 15:03

The NTSB's preliminary report said the Tesla driver engaged Autopilot about 10 seconds before crashing into a semitrailer and the system did not detect the driver's hands on the wheel for fewer than eight seconds before the crash.

Jaguar Land Rover in uphill battle to revive China operations

Thu, 05/16/2019 - 14:40

Jaguar Land Rover is overhauling its Chinese dealer network because it provides insufficient exposure to the country's biggest cities. JLR's $4 billion writedown in February pushed owner Tata Motors to a record loss.

BMW CEO defends record after first automaking loss in decade

Thu, 05/16/2019 - 14:33

BMW is struggling alongside many other carmakers with a downturn in demand and record spending after years of growth. BMW investors have voiced criticisms, but there is little risk of a revolt.

Majority of consumers would welcome self-driving cars, study finds

Thu, 05/16/2019 - 11:22

Capgemini's Markus Winkler said engineers and researchers need to work hand-in-hand with marketers and user-experience experts to create self-driving cars that serve customers' needs.

Nissan spurns lidar tech, siding with Musk

Thu, 05/16/2019 - 10:39

Nissan unveiled updated self-driving technology a month after Tesla CEO Elon Musk called lidar "a fool's errand," berating the technology for being expensive and unnecessary.

Uber prices IPO at $45 a share, at low end of range

Thu, 05/09/2019 - 21:26

Uber, in one of the most high-profile U.S. listings since Facebook's IPO seven years ago, raised $8.1 billion in adopting a risk-averse stance with its equity market debut. The IPO comes against a backdrop of turbulent financial markets and the plunging share price of U.S. rival Lyft.


2 views of the auto industry's future

Thu, 05/09/2019 - 19:40

A decade from now, most auto industry experts believe electric-vehicle sales will exceed 1 million a year, but that self-driving vehicles will still be a niche technology unavailable for purchase by the masses.

Consumers disagree. Less than half of consumers surveyed for a AAA report released Thursday believe that most vehicles will be electric by 2029, while more than half believe their cars will have the ability to drive themselves, "a reality that is much less likely to happen," the report says.

The report examines that disconnect, particularly as it applies to consumer understanding of EVs.

"Like other new vehicle technologies, Americans don't have the full story," says Greg Brannon, AAA's director of automotive engineering and industry relations.

Only 16 percent of respondents say they are likely to buy an EV the next time they're in the market for a new or used car, a number that's unchanged from the results of the same survey in 2018. Among the barriers: uncertainty about how the vehicles work in some common driving scenarios.

For one example, 59 percent of Americans were unsure whether EVs would have better range when driving at highway speeds or in stop-and-go traffic. (Unlike traditional gasoline-burning vehicles, braking recharges the battery for better range.)

Some of those unlikely to buy an EV tell AAA that gasoline prices would need to rise to at least $5 per gallon before there's a sizable impact on their consideration of an electric.

U.S. residents, more accustomed to crossovers and pickups with internal combustion engines, might have a steep learning curve ahead. Driven by a push for EVs elsewhere across the globe, automakers plan to introduce dozens of new electric models in the years ahead.

If there's reason for EV optimism, it's that some of Americans' chief worries about the cars are dissipating. Concern there aren't enough charging points have decreased 11 percentage points over the past two years, as have concerns about running out of charge while driving.

Agitation over higher purchase prices is down 6 percentage points from 2017. In fact, roughly 4 in 10 respondents willing to consider an EV said they'd be willing to pay up to $4,000 more for the vehicle.

"These vehicles are a big part of the future of transportation since self-driving cars, when they do arrive, will likely be electric," Brannon said. "The difference, of course, is that electric vehicles are already here and with the advancements in style and range that have been made over the last few years, they have become an even more viable option for many Americans."

There are some glimmers of hope for consumer acceptance. But at least in the United States, most signs point to a long road ahead for EVs.

— Pete Bigelow

GM-Workhorse talks for Lordstown raise questions

Thu, 05/09/2019 - 18:59

While a deal, which remains far from complete, would keep jobs at the massive Ohio factory, the staffing would be a fraction of GM's 1,400 hourly workers on one shift. GM employed 4,500 people there a few years ago. 

Washington state reinstates EV tax breaks

Thu, 05/09/2019 - 18:03
Washington state, hoping to put 50,000 clean-fuel vehicles on roads by 2020, is reinstating tax breaks for electric and alternative-power vehicles and plans other incentives to spur demand, notably among the state's low-income residents.

Bill Ford: 'Very pleased' with recent stock performance

Thu, 05/09/2019 - 16:35

Ford's leadership defended the company's actions during CEO Jim Hackett's first two years on the job, saying 2019 will be proof they've made the right choices.

Bosch says trade disputes, economic slowdown will hit this year's profit

Thu, 05/09/2019 - 15:55

Bosch said earnings rose to $6.2 billion last year, but warned that 2019 sales will stagnate in the face of a slowdown in the global economy and continuing trade disputes.

Magna Q1 net rises on one-time gains, but 2019 outlook reduced

Thu, 05/09/2019 - 14:51

Magna said first-quarter net income rose to $1.11 billion, up mainly on the sale of its fluid pressure and controls unit. Results also were boosted by a revaluation on its investment in Lyft. Adjusted earnings fell 18 percent. 

Continental affirms profit guidance as it counts on market upturn

Thu, 05/09/2019 - 12:43

Continental expects a market upturn and strict cost discipline to help it achieve its full-year profit guidance, after a downturn in car demand led to a 22 percent profit fall in the first quarter.

Trump says China trade deal is possible as tariff deadline nears

Thu, 05/09/2019 - 12:35

President Trump, speaking at an event in Washington, said he may hold a phone call with his Chinese counterpart Xi Jinping, who had sent him a "beautiful" letter about working closely together.

Zetsche says his successor will have tough job

Thu, 05/09/2019 - 12:14

Daimler's next CEO will have a tough job to restore margins at Mercedes, current boss Dieter Zetsche said, as the automaker launched the EQC electric crossover.