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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

Dion Rabouin, author of Markets
22 mins ago - Economy & Business

The fragile recovery

Data: Department of Labor; Chart: Axios Visuals

The number of people receiving unemployment benefits is falling but remains remarkably high three weeks before pandemic assistance programs are set to expire. More than 1 million people a week are still filing for initial jobless claims, including nearly 300,000 applying for pandemic assistance.

By the numbers: As of Nov. 14, 20.2 million Americans were receiving unemployment benefits of some kind, including more than 13.4 million on the Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) programs that were created as part of the CARES Act and end on Dec. 26.

Ben Geman, author of Generate
42 mins ago - Politics & Policy

The top candidates Biden is considering for key energy and climate roles

Photo: Alex Wong/Getty Images

Senate Minority Leader Chuck Schumer (D-N.Y.) has urged President-elect Joe Biden to nominate Mary Nichols, chair of California's air pollution regulator, to lead the Environmental Protection Agency, Bloomberg reports.

Why it matters: The reported push by Schumer could boost Nichol's chances of leading an agency that will play a pivotal role in Biden's vow to enact aggressive new climate policies — especially because the plan is likely to rest heavily on executive actions.

U.S. economy adds 245,000 jobs in November as recovery slows

Data: BLS; Chart: Axios Visuals

The U.S. economy added 245,000 jobs in November, while the unemployment rate fell to 6.7% from 6.9%, the government said on Friday.

Why it matters: The labor market continues to recover even as coronavirus cases surge— though it's still millions of jobs short of the pre-pandemic level. The problem is that the rate of recovery is slowing significantly.