As we look to the future of urban mobility, one of the questions I am constantly pondering is “Is there an urban mobility product that can effectively compete against an autonomous vehicle fleet powered platform?” From our experience, we know that the bulk of the ride-hailing market cares primarily about the average cost and time he/she spends on the ride. An autonomous vehicle fleet is expected to decrease the cost of rides and hailing times, so the question then is “What product could compete along these two critical dimensions with an Uber or Lyft autonomous vehicle product?”

In my experience, the only product that comes close is a commuting shuttle or van, which usually features a larger 15-passenger vehicle and a driver, and benefits from pickup, dropoff and time densities of the riders during commuting hours. There are two primary variations of the model: fixed vs dynamic routes. My challenge with dynamic routes is that it is essentially Lyft Line and Uber Pool, but with a bigger and more expensive vehicle. Since the Uber Pool and Lyft Line products are operating at significant scale and the experience is generally pretty poor because of the uncertainty surrounding when the rider will arrive to her destination, I think it will be very hard to build a dynamic shuttle product that creates a better consumer experience at a lower cost structure.

So the question really then becomes “Can the consumer’s per-ride total cost and commute time for a shuttle product be more competitive than an autonomous vehicle solution?”* NOTE: Since consumers can use pre-tax dollars to pay for dynamic shuttle trips, we need to consider the post-tax cost to the consumer.

Below is a first attempt to model out the cost structure of both products, and which product is advantaged.

This is of course a rough attempt to map out competitive advantage between these two products. I not only don’t know if this is accurate but I also don’t know the magnitude of each of these advantages.

Much remains to be learned about how low these costs will decline over time or whether they will approach some kind of asymptote, but I think this is the right way to structure this problem, and that this is the right kind of question to be asking when we look to predict what the long-term future of urban mobility landscape will look like.

*Of course, there are some qualitative aspects of the experience that differ, but there is a price at which some market segments find these qualitative aspects worth the trade-off. I will ignore these and focus on the primary value drivers of total cost and time of the trip.