Self-driving vehicles will help empower you with the mobility freedom. Yet, can you afford them? Check out this post for the best answer!

are self driving cars expensive

Proponents of self-driving vehicles are confident that these units will help save our planet as well as empowering large groups of people with mobility-related freedom. That being said, will be people in the utmost need of the technology able to afford it? Read through this post to discover your best answer.

In a hurry? The conclusion should be, you can expect their initial price tags to be the same as the ones of premium models, but maybe not much more costly than the manually controlled version. Wonder why? Refer to the information below when you have time!

Types of driverless cars

1. The types

Reportedly, Americans purchase more than 17 million new vehicles, none of which were fully autonomous. You know, the change is not about to happen overnight. Instead, you can notice an eventual duality that autonomous robot taxi fleets and personally owned cars exist together. They are the two main types of driverless automobiles

First are the models used by Uber, Waymo, Lyft, Aurora, GM Cruise, and other commercial ride-sharing companies. Second are known as private autonomous vehicles like the units made by Tesla.

2. Their advantages

Road crashes claim thousands of lives each year in the United States. The consequence is substantial emotional and financial suffering to society. Highly automated vehicles with the capability of driving themselves some of the time or all – should help. By switching responsibility for driving to machines from humans, this technology diminishes possibilities for any behavioral errors blamed in many road crashes. 

Autonomous smart car scans the road operates the machine automatically stops at the crosswalk in the city
Autonomous smart car scans the road operates the machine automatically stops at the crosswalk in the city

Other advantages of these motors include:

  • Drugged or drunk drivers will not be a problem with this type of car anymore.
  • Because every car will stick to the rules, this will decrease the amount of money and time the government has to spend on security force maintenance.
  • The integrated sensors on autonomous vehicles can be more accurate when compared to human senses. They will come handy while riding on tough terrain or at night.
  • The disabled people have the opportunity to go wherever they wish without needing to ask their family members for a ride or take public transportation.
  • Those who find parking is difficult will appreciate their freedom as the car will be able to drop them at the expected destination and then park itself.
  • The driverless cars’ interior could turn into a leisure room that you, as a driver, can spend your time relaxing and finishing productive tasks instead of entirely focusing on driving. Also, you will not have to face forward always but can spare more time to talk.

Is commercial ride-sharing expensive?

This ride-sharing industry aims at eliminating the human driver to improve its revenue and ultimately show Wall Street the profit. It is a losing battle, as far as we know.

According to folks, many autonomous vehicles are expensive (their self-contained sensor kit alone costs about $100,000) and have not set up for your ownership (on average, a driver spends around $7,000 annually on a car altogether and finds it is hard to invest in the high-cost teched-out automated vehicles). Is it true? Are robotic cars synonymous with the end of car ownership? In other words, does it mean that everyone should ditch their vehicle to access a self-driving car via a ride-hail service? 

1. Self-driving cars do not mean the end of ownership

Have you ever wondered, for specific drivers such as those who need to rely on one pickup truck to haul something, go surfing, or carry a boat, an autonomous vehicle service is more complicated than only ordering a ride via an app like you are doing today? You will need something working for your particular situations. They fail to fit with autonomy.

2. Robot taxis vs. Older vehicles

When it comes to the cost of these cars, is expecting robot taxis to be cost-competitive with owning your older cars any time soon realistic? 

The answer lies right in the results from the study by Harvard Business Review. They gave most of the attention to the city of San Francisco. 

To begin with, they calculated how much it costed to own one older vehicle from the Bay area. Then, they used public financial data related to the local taxi industry to approximate likely robot taxi operating expenses – for example, vehicle licensing, cost, insurance, cleaning, fuel, maintenance, and safety oversight. Also, they adjusted the expenses for including envisioned profit margins that investors expected in the technology. 

Last but not least, they applied econometric testing to define whether and under what conditions fares of robot taxis could be less. Though they are an estimate, these figures reflect the most informed knowledge about robot taxis.

Assuming existing market conditions hold, they estimate that using one robot taxi will cost you as a consumer roughly three times more – each mile – than being the owner of an older vehicle. Note that this result’s key driver is not the robot taxi’s capital cost, which the study conductors assumed to be only $15,000, well below how much a new car is on average. Nor is it owing to high gas, insurance, or the costs for maintenance. 

You could reduce all of these to zero, and hailing a robot taxi might still be more costly compared to owning an older vehicle. Instead, the utilization rate of the car mostly drives high robot taxi fares; it is how much of time these vehicles have poured into shuttling passengers around. (Taxi utilization rates these days hover about 50%). 

start an autonomous car drive

What is more worrying is, even if robot taxis got an unrealistically high price of utilization and even when their investors decreased their profit expectations, they would need to considerably lower the cost of offering safety oversight (to under current minimum-wage levels). That way, robot taxi fares could be cost-competitive with having your own older car.

We can conclude on a cautionary note that since self-driving technology is developing fast, ride-sharing services will be likely to deal with the existing and potential challenges so that they can be beneficial – especially for people who need it most – and affordable at the same time.

Are private autonomous cars costly?

If Tesla succeeds in developing a Level 4/5 vehicle and manages to deploy the Tesla Network planned, the game may be over for the commercial rideshare services. They will not be able to be competitive in terms of price.

1. The cost advantage

Understandably, low overhead costs are hardly attained with internal combustion vehicles, and Tesla will get a significant advantage in EVs (Electric Vehicles) when autonomous technology becomes flawless. Tesla roughly calculates the 5-year, cost/mi to run the Model 3 EV at only $0.18/mi because of lower costs for operating and maintenance, as well as more extended service life.

A half million vehicles by Tesla have already been equipped with cutting-edge self-driving hardware, and the quantity will likely reach over a million by the end of this year. Those who own Tesla vehicles will have the chance to join the network of ride-sharing charging no matter what the market will bear, yet undoubtedly undercutting fees that have been charged by the Lyfts of the world that will still count on mainly high-cost ICEVs ((Internal Combustion Engine Vehicle(s)).

Until the auto industry’s rest catches up to Tesla and manufactures efficient, reasonably-priced EVs that come with Level 4/5 autonomous driving systems, the demand for vehicles by Tesla will undoubtedly rise, as will the prices. An automobile in the Tesla network will produce a healthy revenue stream for many owners based on the percentage of time dedicated to ride-sharing.

a driverless car with the owner inside

2. Time to become more affordable 

In the end, you will see the restoring of balance in the market, and the prices of self-driving cars will become stable at more friendly levels. If the fees for the ride-sharing drop to about $0.50/mi, a lot of people will probably not bother buying a car for their private use. It will become less expensive and more convenient for you to hail a robocar.

The bottom line

Manufacturers will likely place a premium upon these types of cars, perhaps because they will be premium vehicles at first. They almost unquestionably will be more pricey as opposed to a similarly manually driven vehicle, yet that may not last long.