I call this claim the “Big Ass Assumption” (BAA). The BAA that a critical cost component goes away isn’t as crazy as it sounds. As Mark Suster points out, deflationary economics are often the driving force behind both (i) market expansion and (ii) new use-case creation for older technologies.
What better case study is there for this concept today than the cost of urban transportation — a pervasive cost for any business that wants to touch the physical world?
I believe automotive autonomy will drive transportation costs down precipitously over the next decade for several reasons:
These trends should put new research from ARK Invest in context. It shows that Shared Autonomous Vehicles (SAVs) will be cheaper than even walking, when one accounts for the cost of cheap calories to fuel a mile of ambling:
SAVs will be a screaming deal especially for short distances. Public transit may still have a place for longer hauls, but much of the short distance urban commuting we see today will be cheaper and more convenient with SAVs:
Such incredible deflationary economics in urban transportation will create a sea change in the way we design cities. It will also create a sea change in the services that move people or things.
Once the 1st order problem of autonomous urban transit is solved, the biggest boon of all may be the “apps” built on top of this new infrastructure. Think of business models that have been logistically intensive and historically challenge: food delivery, product rental, etc.
I’m excited to see “apps” built on the infrastructure provided by companies like Uber, Didi, and their brethren. Business models that have been economically challenged historically (e.g. on-demand delivery, product rental) may all of the sudden make sense. The BAA of effectively free urban transit should create many new opportunities that entrepreneurs will no doubt pursue in earnest…and many of them will work this time!