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GM's self-driving Chevrolet Bolt EV. Photo: GM

Automakers like GM and Ford are banking on the the assumption that if they can lower the cost per mile of self-driving taxis to $1 or less, demand will skyrocket. But a new analysis in the Harvard Business Review suggests their model may be flawed.

Why it matters: Carmakers are tearing apart their traditional businesses — exiting underperforming markets, closing factories and laying off workers — while diverting investment into future mobility technologies. But if self-driving taxi fleets don't take off as expected, their financial plans could be at risk.

What they're saying: Ride-hailing costs around $3 per mile today, according to GM, but only accounts for 1% of miles traveled. The driver represents most of that cost.

  • Without a driver, the cost per mile falls to around $1 per mile.
  • At that point, robotaxis will be so cheap everyone will travel that way — or so the theory goes. It's all about deploying at scale, as GM Cruise CEO Dan Ammann likes to say.

Yes, but: Authors Ashley Nunes and Kristen Hernandez see it differently.

  • They found the estimated cost per mile of a robotaxi in San Francisco was 3 times higher than the cost of owning an older vehicle.
  • The gap was due to lower utilization rates than carmakers assume. (Current taxis are in use about 50% of the time.)
  • Even if robotaxis had substantially higher utilization rates, the cost of providing remote oversight by humans must be factored in.
  • The only way for robotaxis to be cost competitive with older cars is if the remote operators are paid well below minimum wage, the authors said.

Consumer subsidies will be needed to realize the life-saving benefits of AVs, they conclude.

The bottom line: Self-driving cars need to be affordable to serve those who need them most, and to keep carmakers' strategies afloat.

Go deeper: Here come the robotaxis

Go deeper

Capitol repairs, security top $30M since Jan. 6 attacks

Photo: Bill Clark/CQ-Roll Call, Inc via Getty Images

The Architect of the Capitol Brett Blanton on Wednesday said that repairs and security expenses related to the Jan. 6 insurrection have already cost more than $30 million.

The state of play: Congressional appropriations committees have allocated the $30 million for repairs and perimeter fencing around the Capitol building through March 31, per NPR.

Updated 3 hours ago - Politics & Policy

White House stands by imperiled Tanden nomination after Senate panel postpones hearing

Neera Tanden. Photo: Anna Moneymaker/The New York Times/Bloomberg via Getty Images

The Senate Homeland Security Committee is postponing a confirmation hearing scheduled Wednesday for Neera Tanden, Axios has learned, a potential death knell for President Biden's nominee to lead the Office of Management and Budget.

The latest: Asked Wednesday afternoon whether Tanden has offered to withdraw her nomination, Psaki told reporters, "That’s not the stage we’re in." She noted that it's a "numbers game" and a "matter of getting one Republican" to support the nomination.

Acting Capitol Police chief: Officers were unsure of lethal force rules on Jan. 6

Photo: Chip Somodevilla/Getty Images

Acting U.S. Capitol Police Chief Yogananda Pittman wrote in prepared remarks for a House hearing on Thursday that officers in her department were "unsure of when to use lethal force" during the Jan. 6 insurrection.

Why it matters: Capitol Police did deploy lethal force on Jan. 6 — shooting and killing 35-year-old Ashli Babbit — but have faced questions over why officers appeared to be less forceful against pro-Trump rioters than participants in previous demonstrations, including those over Black Lives Matter and now-Supreme Court Justice Brett Kavanaugh.