This is all really interesting but I think the bet on the speed of the switch to AV from S&P is super conservative. I think we're all going to be blown away by how fast the flywheel moves once it gets going.
It's a ways out but I think 10-20 years is the right order of magnitude for parity considering how costly/slow it is to scale AVs. On the one hand, Waymo's scale is incredible, they now have over 3,000 vehicles and doing 450,000 trips per week.
On the other hand, there are 110k Uber and Lyft vehicles and over 700k trips per day in the NYC market alone.. Multiply that by 20-50 big cities. And not to mention the fact that it will be challenging for Waymo to reach the more rural / low density markets outside of a big city.
It’ll start expanding out from Waymo eventually tho.
Eventually the automakers will want a piece of it, preferring to sell subscriptions to fleets over selling vehicles… recurring revenue trumping intermittent revenue.
Get a certain amount of that on the road, insurers will start to disfavor humans.
People will start to ditch car ownership for fleet membership. Dealerships start to close. New vehicle supply starts to contract as the fleet pivot gets underway. Lifetime cost of vehicle ownership starts to rise.
Poor and middle class people start to ditch their cars. Companies convert the glut of used cars to AVs for Rent-A-Wreck of fleets expands.
Game over.
That’s what I mean by flywheel. It’s just going to be a better deal and once that clicks? bye-bye car keys.
I wouldn’t be surprised if within a decade Homeowners Associations start collectively bargaining for onsite fleets, guaranteeing residents a certain number of AVs in the ‘hood by 7AM every day. eTc etc etc
Harry, thanks I enjoyed your summary and analysis.
Echoing what Brady said, it seems like the transition could happen much faster than you lay out.
The analysis you highlighted concluded that AVs were having a small but noticeable impact on rideshare economics in 2025. That's during a period when the total number of commercial AVs went from ~2,000 to ~3,000.
Looking forward, Waymo is potentially going to put 50,000+ AVs on the road over the next 3 years. Here's one of several partnership they are pursuing:
50,000 / 3,000 = 17x. A 17x scale up over 2025 numbers should have a much larger impact on rideshare than we saw in 2025. And that's just Waymo - Zoox, Tesla, AVride, Nuro/Uber/NVIDIA/Lucid, and more are all going to be putting thousands of AVs on the road as well.
I agree that exurban and rural areas will be much slower to feel these changes than urban and 1st ring suburbs.
In 2030, for major metro areas from New York down to ~St. Louis in size, don't you think the rideshare market looks very different from today?
I think vehicles is the limiting supply to Waymo's growth right now. 50k vehicles would obviously help but that number hasn't been confirmed and I'm skeptical that Waymo is ready for that kind of scale..
Here's what I wrote about that deal in February:
"The bigger question is operational readiness. 50,000 vehicles would require a step change in depots, charging infrastructure, maintenance networks, regulatory approvals across dozens of jurisdictions, and likely deeper integration with partners like Uber and Lyft.
I’m not sure Waymo is ready for that kind of scale. My guess is that if something like this materializes, it either stretches over a longer timeline or ends up being fewer vehicles. But directionally, the logic of the partnership makes sense."
This is all really interesting but I think the bet on the speed of the switch to AV from S&P is super conservative. I think we're all going to be blown away by how fast the flywheel moves once it gets going.
It's a ways out but I think 10-20 years is the right order of magnitude for parity considering how costly/slow it is to scale AVs. On the one hand, Waymo's scale is incredible, they now have over 3,000 vehicles and doing 450,000 trips per week.
On the other hand, there are 110k Uber and Lyft vehicles and over 700k trips per day in the NYC market alone.. Multiply that by 20-50 big cities. And not to mention the fact that it will be challenging for Waymo to reach the more rural / low density markets outside of a big city.
It’ll start expanding out from Waymo eventually tho.
Eventually the automakers will want a piece of it, preferring to sell subscriptions to fleets over selling vehicles… recurring revenue trumping intermittent revenue.
Get a certain amount of that on the road, insurers will start to disfavor humans.
People will start to ditch car ownership for fleet membership. Dealerships start to close. New vehicle supply starts to contract as the fleet pivot gets underway. Lifetime cost of vehicle ownership starts to rise.
Poor and middle class people start to ditch their cars. Companies convert the glut of used cars to AVs for Rent-A-Wreck of fleets expands.
Game over.
That’s what I mean by flywheel. It’s just going to be a better deal and once that clicks? bye-bye car keys.
I wouldn’t be surprised if within a decade Homeowners Associations start collectively bargaining for onsite fleets, guaranteeing residents a certain number of AVs in the ‘hood by 7AM every day. eTc etc etc
Yea fair, and all good points. But OEM product cycles are NOT quick. So let's call it 10+ years :)
Harry, thanks I enjoyed your summary and analysis.
Echoing what Brady said, it seems like the transition could happen much faster than you lay out.
The analysis you highlighted concluded that AVs were having a small but noticeable impact on rideshare economics in 2025. That's during a period when the total number of commercial AVs went from ~2,000 to ~3,000.
Looking forward, Waymo is potentially going to put 50,000+ AVs on the road over the next 3 years. Here's one of several partnership they are pursuing:
https://finance.yahoo.com/news/waymo-mulls-2-5-billion-003105155.html
50,000 / 3,000 = 17x. A 17x scale up over 2025 numbers should have a much larger impact on rideshare than we saw in 2025. And that's just Waymo - Zoox, Tesla, AVride, Nuro/Uber/NVIDIA/Lucid, and more are all going to be putting thousands of AVs on the road as well.
I agree that exurban and rural areas will be much slower to feel these changes than urban and 1st ring suburbs.
In 2030, for major metro areas from New York down to ~St. Louis in size, don't you think the rideshare market looks very different from today?
I appreciate your insight here.
I think vehicles is the limiting supply to Waymo's growth right now. 50k vehicles would obviously help but that number hasn't been confirmed and I'm skeptical that Waymo is ready for that kind of scale..
Here's what I wrote about that deal in February:
"The bigger question is operational readiness. 50,000 vehicles would require a step change in depots, charging infrastructure, maintenance networks, regulatory approvals across dozens of jurisdictions, and likely deeper integration with partners like Uber and Lyft.
I’m not sure Waymo is ready for that kind of scale. My guess is that if something like this materializes, it either stretches over a longer timeline or ends up being fewer vehicles. But directionally, the logic of the partnership makes sense."
https://thedriverlessdigest.substack.com/p/waymo-is-paying-doordash-drivers?r=9bys&selection=aa5d5ec8-c4ea-4d3a-9b21-c68e60559653&utm_campaign=post-share-selection&utm_medium=web&aspectRatio=instagram&textColor=%23ffffff&bgImage=true
Got it - it makes sense that the timelines could stretch out due to various bottlenecks. Thanks!