There is growing interest in who will dominate the self-driving future: car companies, ride-sharing companies or someone else? My bet is on ride-sharing companies, and the reason is that I think that the self-driving car industry will require expertise that currently resides with ride-sharing companies. Furthermore, the kinds of things car companies have traditionally differentiated themselves on will not matter very much, pushing them into a commodity role.
**Important full disclosure: A close family member of mine works for a ride-sharing company.**
On the consumer side, I suspect that in the future people will think about the manufacturer of the self-driving vehicle they are in as much as they think about the manufacturer of the bus, train car or airplane they are in now, which is to say “very little.” They will not care about styling, aesthetics, mileage, maintenance, parts availability, re-sale value, and service costs, what it says about them as a person to own one, and so on. All things that would be car-buyers care about a great deal will matter very little. There’s a reason there’s no magazine called “Bus & Passenger.”
Some of these vehicle attributes will affect *costs* to platforms—and buyers of fleets of cars will presumably try to buy high quality at low cost, but they aren’t going to pay a premium for design or a brand. The self-driving world is going to be an ugly, commodified world focused on cost and reliability.
Customers *will* care about fleet reputations for cleanliness, timeliness, routing quality, customer service support, safety, and so on—the things they care about with airlines—but these are things that will be determined more by the *operational* excellent of whoever manages the fleet. Unfortunately for car makers, operations is not their forte, whereas the ride-sharing companies are extremely operations/customer-service focused.
Ride-sharing companies have expertise in customer service, marketing, analytics, developing maps, developing routing algorithms, creating software interfaces, and fighting regulatory/legal battles. All of these things are still likely to matter a great deal in the self-driving future. The customer service aspect in an area where these companies are actually quite different form the Silicon Valley mold—they deal with paying customers constantly in a high-touch way, unlike say Google or Facebook.
Ride-sharing companies don’t have expertise in managing fleets of cars (fueling, cleaning, repair and so on), but neither do car companies. But even then, this part of the business doesn’t seem that hard relative to the others, and there are lots of companies and people with this expertise (UPS, FedEx, Hertz, Avis etc.). Car manufacturers have almost no experience with operations. And they have almost no experience dealing with customers.
On the actual self-driving technology side, to extent that improvements will be driven mainly by more and better data rather than hardware, the ride-sharing companies are also the ones well-poised to collect the most data about driving under actual and varied conditions in the long run up to a fully-automated future.
Perhaps the biggest advantage held by ride-sharing companies is that they have a very natural way to transition to the future—start slipping self-driving vehicles into the mix, pacing the introduction as the technology develops. In contrast, the car companies (or Google/Waymo) essentially need to clone Uber or Lyft functionality, but do it with an unproven technology from day one. This will be very hard. Instead, car companies will largely choose to partner with ride-sharing companies, but the ride-sharing companies will have lots of manufacturer options to choose from, and are not going to give away the company to do so, or recklessly form exclusive partnerships.
One might argue that you can’t have a fleet without a car maker willing to sell to you, but there are many, many car markers out there. Just because the car is an essential component of the productive process doesn’t mean that the maker of that input will control everything—McDonalds isn’t a subsidiary of a stove company.
Anyway, for course this is all highly speculative and maybe I’ll wistfully read this naive blog post from my Ford-brand self-driving vehicle in a few years, but I think it’s more likely it will be an Uber/Lyft/Didi/Ola/Gett and some nameless, white-label vehicle made by Honda.