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A ride-hailing vehicle in New York City. Photo: Spencer Platt/Getty Images

Ride-hailing companies like Uber, Lyft and China's Didi have dominated the emerging mobility market and are now investing in autonomous technology, which Goldman Sachs projects would accelerate growth and increase profitability by eliminating driver subsidies.

The big picture: Even with AV fleets, however, ride-hailing companies may struggle to improve their bottom lines without addressing other inefficiencies in their business model. The time ride-hailing vehicles spend empty (traveling 2.8 miles for every mile in service) only exacerbates the role they have played in slowing city traffic, by up to 20% in New York and 51% in San Francisco.

Background: After launching in 2009, Uber reached more than 700 cities in some 80 countries with 41 million riders in the U.S. alone. Lyft followed in 2012 and now operates in 300 cities and provides more than one million rides per day. China’s DiDi also launched in 2012 and now serves some 550 million users in 400 cities.

Where it stands: Even though none of these companies is near profitable, they are getting hockey-stick valuations. Uber lost some $4.5 billion in 2017 and its IPO filing suggest a valuation of $120 billion. Lyft lost $600 million and its IPO is expected to fetch $15 billion. Their investments in autonomous mobility have been seen as critical to profitability.

The catch: Simply replacing ride-hailing cars with robotaxis will not fix the supply-demand mismatch, which could be economically disastrous if ride-hailing businesses own their fleets (currently, they don’t lose money when vehicles are empty because they only pay drivers when a passenger is in the car).

  • Then there are the capital costs of self-driving fleets, which Bloomberg has estimated as an initial outlay of $306 billion.

What's needed: Moving more people with fewer vehicles and collecting more fares per trip (as in pooled rides, for example) could smooth the road to profitability.

  • Ride-hailing companies may also opt to lower upfront spending by outsourcing vehicle ownership and management to firms like Keolis or Transdev — as city transit agencies often do — and turn to companies like Bestmile, door2door and Routematch to optimize their matching of supply and demand.

The bottom line: Even in an autonomous world, someone needs to own, maintain and manage fleets of those expensive vehicles.

Raphael Gindrat is co-founder and CEO of Bestmile, which has developed a fleet-management platform.

Go deeper

DOJ: Capitol rioter threatened to "assassinate" Alexandria Ocasio-Cortez

Supporters of former President Trump storm the U.S. Captiol on Jan. 6. Photo: Kent Nishimura / Los Angeles Times via Getty Images

A Texas man who has be charged with storming the U.S. Capitol in the deadly Jan. 6 siege posted death threats against Rep. Alexandria Ocasio-Cortez (D-N.Y.), the Department of Justice said.

The big picture: Garret Miller faces five charges in connection to the riot by supporters of former President Trump, including violent entry and disorderly conduct on Capitol grounds and making threats. According to court documents, Miller posted violent threats online the day of the siege, including tweeting “Assassinate AOC.”

Schumer calls for IG probe into alleged plan by Trump, DOJ lawyer to oust acting AG

Jeffrey Clark speaks next to Deputy US Attorney General Jeffrey Rosen at a news conference in October. Photo: Yuri Gripas/AFP via Getty Images.

Senate Majority Leader Chuck Schumer (D-N.Y.) on Saturday called for the Justice Department inspector general to investigate an alleged plan by former President Trump and a DOJ lawyer to remove the acting attorney general and replace him with someone more willing to investigate unfounded claims of election fraud.

Driving the news: The New York Times first reported Friday that the lawyer, Jeffrey Clark, allegedly devised "ways to cast doubt on the election results and to bolster Mr. Trump’s continuing legal battles and the pressure on Georgia politicians. Because Mr. [Jeffrey] Rosen had refused the president’s entreaties to carry out those plans, Mr. Trump was about to decide whether to fire Mr. Rosen and replace him with Mr. Clark."

3 hours ago - World

Brazil begins distributing AstraZeneca coronavirus vaccine

Containers carrying doses of the Oxford/AstraZeneca vaccine arrive in Brazil. Photo: Maurio Pimentel/AFP via Getty Images

Brazil on Saturday began distributing the 2 million doses of the AstraZeneca coronavirus vaccine that arrived from India Friday, Reuters reports.

Why it matters: Brazil has the third highest COVID-19 case-count in the world, according to Johns Hopkins University data. The 2 million doses "only scratch the surface of the shortfall," Brazilian public health experts told the AP.

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