We're looking at different metrics, you're analyzing the average total cost, while I'm analyzing the marginal cost. Waymo has enormous fixed costs like you mentioned, mapping cities and paying engineers are not cheap, which need to be amortized over a massive self-driving fleet. But those are fixed costs which don't increase with fleet size. Waymo currently operates only ~3000 vehicles, which is not enough to amortize those fixed costs into overall profitability.

What matters most are marginal costs (i.e. how much does it cost for Waymo to add 1 more ride). Looking at marginal costs, Waymo takes in more money than it spends on each ride, so projecting outwards when Waymo operates a large enough fleet, Waymo will be profitable.

Uber/Lyft run enormous fleets of ~2 million vehicles in the US, and that's how they are able to maintain profitability. They can spread their engineering and management expenses over millions of rides.

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Doing my own math, the marginal costs for Waymo are:

Revenue: Each Waymo vehicle brings in ~$50/hour

Expenses: Waymo must pay for

* Assume the cost of a vehicle is $100k

* Amortized depreciation of the car (assume vehicles need to be fully replaced after ~250,000 miles, vehicles average 25 miles / hour, vehicles need to be fully replaced after 10,000 hours, cost is $10/hour)

* Maintenance (Assume the total cost of maintenance is an additional 25% of the vehicle price, vehicle price is $100k and vehicle lasts 10,000 hours, cost is $2.5/hour). This is likely an underestimate, I didn't model the cost of a mechanic, so this could be as high as $5-7/hour.

* Support (assume 1 support agent can support 10 vehicles, Philippine support agent costs $10/hour, so amortized $1/hour per vehicle)

* Cleaning (needed daily, costs $1/hour per vehicle)

* Datacenter compute for vehicle coordination ($0.50/hour per vehicle)

* Electricity (Assume $2/hour)

10 + 2.5 + 1 + 1 + 0.5 + 2 = $17/hour to operate a Waymo.

In conclusion, the marginal costs for Waymo is very profitable.

In San Francisco, it has to be. Because of prop 22, Uber/Lyft must compensate drivers a minimum of $22.40/hr, plus $0.36/mile for vehicle expenses. Waymo doesn't have this cost, so it's effectively ~$25/hr cheaper to operate than Uber/Lyft.

I looked up the numbers - the estimated Uber/Lyft cost per mile in SF is ~$4.50/mi, and Waymo is trending around $1.40/mi (estimated 2025 number).

Of course, but I never claimed that they would do that. At some point though other autonomous services will enter the market and Waymo will have to compete with them on price. Even if that doesn't happen (which seems incredibly unlikely), they're still competing against public transit and people driving themselves (or privately owned self driving cars). Not having to pay a driver means the floor where they can make a profit is lower.

If we're in a world where human driven Uber's are $30, you're right that Waymo probably won't charge $20 just to be nice, even if it only costs them $10. They might charge $20 though if their data shows that it would 10x the number of riders or if they're also competing with another autonomous taxi company.

That sounds right. Passenger pays for lower risk, etc. The market sees the company making $2 extra and a competitor will see if they can do it for just $1 extra.

(nobody would confuse me with an economist!)

> A robo taxi only has down time when there are no rides, or for charging and maintenance/cleaning.

It's wierd to see this fantasy of machines on HN, of all places - that they have no downtime, no additional costs - it's only a savings from employing people), and (not said here) they don't make mistakes.

Lots of machines have far more downtime and cost than people. Many have more maintenance hours than operating hours.