Baidu has been authorized to start charging for its autonomous robotaxi service in Beijing with a safety driver, after providing the service free of charge with 67 vehicles since October 2020, since when more than 20,000 people made around ten trips per month.

It’s been possible for some time now to find autonomous robotaxi services with a safety driver in several Chinese cities, but until now, they were free. In Russia, the United States and Israel, Yandex also offers rides with a safety driver; in the United States, Waymo alone offers a paying service without a safety driver.

Waymo is an interesting case: it started offering free services with a safety driver in Phoenix in April 2017, and received the license to eliminate the safety driver in October 2018, the same month in which it started charging passengers for their rides. At the time, it was estimated that Waymo was offering those trips for about 35 cents per mile, factoring in about five cents for the cost of remote monitoring. Today, after experimenting with different pricings, the cost of a Waymo trip is about 10% more expensive than the same ride in an Uber or Lyft.

Baidu will be charging a premium price, equivalent to a luxury vehicle in a ride-hailing service such as Didi, which tend to be around twice as much as a standard category ride. Considering that in China it will remain obligatory for a safety driver to be behind the wheel, and that such drivers cost more than conventional cab drivers, the price seems to be placed at a premium simply to capitalize on the curiosity generated by the autonomous driving service.

Around 60% of the cost of a traditional taxi corresponds to the driver. Therefore, the transition to autonomous robotaxis should lower the price of transportation. However, the evidence for the moment is that the companies offering robotaxis tend to charge more than for the same trip in a vehicle with a conventional driver, an after-effect of the enormous cost in research and development necessary to create the service, to the need, for example, to maintain people, either as security drivers, or in remote mode monitoring the trips and helping passengers.

On the other hand, transportation in an autonomous vehicle, for the moment, is not without its drawbacks: for example, while with a human driver you could reasonably negotiate a point to end the journey: “drop me off at the corner”, with an autonomous vehicle, your journey ends where the application considers it can drop you off. If we add details such as helping passengers, carrying suitcases, etc., for the moment, with all the precautions involved in evaluating a service at such an early stage of its development, the fully autonomous service has its limitations… and comes at a premium price. On the other hand, it is conceivable that the companies offering this type of service are keeping prices artificially high to avoid an avalanche of users attracted to a service still in its experimental phase and in small numbers.

What can we expect down the road, when glitches have been overcome overcome and there is little need for supervision? Experiments with selected groups of users during beta mode testing indicate that the novelty effect wears off quickly, and that people see it as normal in a surprisingly short time. Can we then expect a price premium above traditional chauffeur-driven vehicles, even if the cost of operating the service is considerably lower? Such a positioning would surely need to be sustainable — or simply explainable — if it were to be offered as safer than being driven by a human, which may be true, but is a hard sell, to say the least, especially in the early stages of roll out.

In the medium term, the price should move downwards in line with the lower operating cost of the service, but this may not be the case if there is no competition. In such a scenario, traditional services would be demand-based, as well as on some people’s fears of not seeing anyone sitting behind the wheel, and on the other, on their lower price, until the transition would occur based on other factors, and certainly much more slowly than if autonomous services capitalized on their ability to offer a significantly lower price.

How will the pricing of autonomous vehicle-based transportation services evolve? Is eliminating the cost of the driver the yardstick to consider, or do we need to evaluate it in some other way? Once the initial appeal of a driverless ride fades, why on earth would anyone want to pay a premium price for a fully autonomous service?

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