Wednesday, January 11, 2017

Ancillary business opportunities from the emergence of autonomous ride share car services

The list of self-driving vehicles and companies starting to offer services of these vehicles is ever growing. I recently started to be interested in the ancillary challenges brought by the deployment of a fleet of autonomous vehicle and the business opportunity that emerge.

There is two interesting business area with a certain potential: cleaning services and real estate. 

Support service ecosystem:

Supports services are the main area of expansion created by companies like Uber, Google making a foray in the autonomous ride share business model. They will more likely outsource these operation to third parties as it these business has a low-profit margin and tends to be hard to automate (as in requiring manual labour). 
I have three daughters under 5 and, let's face it, my car is a mess. It takes less than 2 rides to transform a clean spotless car interior in the equivalent of the Omaha beach d-day aftermath. And this is the same for taxi / uber drivers, the current best practice recommendation is to have cleaning implements and a throw-up bag at all time in the car in order to maintain high standard and rating. Not to mention the cleaning fee if things go really bad. 

Now if you have an autonomous car, you will need to have it clean often as they will be providing ride 24/7. 
Repair and maintenance requirements are obviously another areas that will need to be developed. By example, In Uber current model, the cleaning, repairing and refuelling is the responsibility of the owner of the car. However, when shifting to the autonomous ride, Uber will start to need to, either provide this service internally or outsource it. 
Refuelling and recharging might be less of a problem as there is a clearer way of automating the process. 

Real estate issue:

Another side effect is that for cleaning, recharging and repairing operations require real estate. You cannot deliver these service in the middle of the street. And this is another problem that corporations will have to solve. To some extent Google and Uber are trying to go around this issue by deploying their solution first in confined areas like college campuses, military bases or corporate office parks. As the owner of these private space will be able to provide space for free in order to benefit from the service. However, as they expand outside, this will become more problematic. Moreover, they might want to have buffer zone where the fleet of vehicles is at rest in off-peak periods.
Being able to deliver efficiently the logistic for support service while maximising resource efficiency will literally make or break the business model of autonomous rideshare. One possibility would be for these companies to contract, uber style, individual to offer their driveway and cleaning/refuelling services. Companies will be able to use the cleanliness rating made by the customer to evaluate the service quality of the individuals. This would partially solve the real estate issue until town planner starts to accommodate this new mode of transport. It will also allow to grow cheaply a widely distributed service point location. Enabling just in time servicing, hence maximising car usage efficiency. 

To some extend the new business model deployed by the like of Uber couple with the commoditization of service create new business opportunity for ancillary support services. Unsurprisingly, these services can copy or adapt the same business model to scale while keeping cost down. However, it might be a little bit too early for these to blossom as we haven’t reached peak Uber fade and fleet of self-driving cars are a couple of years away. I would probably keep an eye instead on the less glamorous but potentially more lucrative self-driving trucks business instead.

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