First we need to make some assumptions. Then we need to look at his costs. Then his revenue. Then his profit or loss.

Assumptions

This is a projection. I am not a soothsayer. So we have to make certain assumptions. Let’s err on the side of conservatism. In other words, when in doubt, let’s assume things aren’t going to get better, cheaper, faster. Here are the assumptions:

Location is New York City

The car is parameterized by a Tesla Model 3

Fares and demand are constant

No EV tax credits, incentives, and so on

Cars will opt to Supercharge

Supercharger network density will mean <10mi to nearest node from any point on an urban map

Battery capacity doesn’t wane during this window

Maintenance once a month, downtime of 24hrs

No change in electricity costs

I think that’s it.

The Car

So Rafael’s car of tomorrow is an upgraded Tesla Model 3. Why?

With a few upgrades, all the hardware needed for automation is ostensibly baked in

It’s a real car, not a prototype

There’s a lot of data available about it

Maybe production and competition will ramp up and Rafael’s car will be cheaper and more capable. Maybe car ownership will plummet, the technology will stall, and more expensive, incapable cars will become the norm. The former is more likely. Regardless, this seems like a reasonable starting point.

Let’s look at the Tesla Model 3’s parameters:

Our autonomous car of the future is a Tesla Model 3

Operations

Here’s how it’ll work. The car starts fully charged. It heads out to work. It’s average operating speed is 17.6mph (NYC is a congested town). It operates until a remaining range of 5% (15.5mi). At that point it heads back to recharge. Once charged it has completed a single lap. It then begins it’s next lap. It continues in this way ad infinitum. Actually, it continues until it needs maintenance.

Tesla says the Model 3 needs maintenance once a year or every 12,500 miles, whichever comes first. With our usage, 12,500 miles is going to come first. Way first. Like every 12 days. That doesn’t seem practical. Apparently, some drivers with double or triple this mileage were advised by Tesla to nevertheless come in only once a year. We want to be conservative. So let’s bring our car in for maintenance once a month. According to Tesla owners the annual maintenance takes 24hrs. We’ll assume we’re not given a loaner.

Lastly,

Operational parameters:

Average Urban Speed (mph) 17.6

Recharge Trip Buffer 5%

Costs

Alright, next we’ll consider the costs. Here are the items I could think of:

Vehicle down payment

Vehicle monthly lease payments

Maintenance

Charging

Insurance

Rideshare Commission

Sales tax

Income tax

Again, to be conservative, we’ll ignore incentives. We’ll also assume insurance premiums remain constant. Here are the costs associated with the vehicle.

The car would need some upgrades, and then there’s maintenance, power, and insurance

And of course, taxes and fees (remember we’re in NYC):

Financing

Rafael won’t want (or be able) to drop $50k cash on his car. So I borrowed some financing parameters from a Tesla owner’s forum. These are the least favorable terms I could find.

Financing terms inspired by Tesla owner forum posts

Cost Summary

So let’s tally up our monthly costs. Any costs that aren’t monthly (e.g. down payment) we’ll amortize over 12 months.

Revenues

This is the easy part. Rafael will make whatever his car brings in. The car will bring in money as long as it’s picking up and dropping off passengers. It won’t make money when it’s idle. It’s idle when it’s driving back to re-charge. It’s idle when it’s recharging. It’s idle when it’s in maintenance.

We can avoid worrying about utilization rate, trip duration, surge pricing, and so on by using published data on average fares and trips per hour.

Average Fare (NYC) $25.91

Average Trips per Hour 2.00

This, in principle, should bake in those other factors. It also allows us to proceed with our assumption that fares and demand are constant.

A lot hinges on the accuracy of these data. Different sources offer different numbers. It’s often unclear whether the numbers are pre- or post-rideshare fees. I tried to choose se the least favorable.

So now we simply need to figure out the car’s total earning road time.

And the total revenue:

Net

Alright. We’re at the finale.

That’s a lot of money.

Final Thoughts

I’ve almost certainly made mistakes. Please point them out to me. Here are a few interesting observations from this analysis:

New York City caps drivers to 10 hours of driving per 24 hours as part of the Fatigued Driving Prevention Rules. Our car can operate at 21.3 earning hours per day. That’s a 113% advantage in earning potential

advantage in earning potential A lot hinges on the accuracy of our data. Specifically, Gross Average Fare, Trips per Hour, and Average Urban Speed. Different sources offer different numbers. I tried to choose the least favorable.

Vehicle warranty (50k mi) would be exhausted by mileage in 48 days. Battery warranty (120k mi) would be exhausted by mileage in 114 days. Tesla recommends maintenance every 12,500 miles, which would translate to every 12 days. More rugged commercial vehicles may need to be developed.

Profit margins are too big. Competition will narrow margins. Consumers will see significant savings; car owners likely to see greater commissions

Fares could be reduced 40% without negatively impacting status quo. Fares could be reduced 70% before drivers stop making money

Autonomous cars will have at least 1 additional free seat; capacity will increase, revenue per hour should increase as well

Supercharging to 80% takes 40 minutes. The last 20% takes another 40 minutes. In practice, it may be more economic to only partially recharge and make more frequent recharge stops

As predictable cashflow assets, fleets of autonomous vehicles might be securitized and sold on capital markets

Fork the spreadsheet and play with different scenarios. Let me know what you discover.

TL;DR

Autonomous cars in rideshare services may generate a monthly profit of over $10k. Cost of rideshares will almost certainly plummet.

Sources