Autonomous Mobility on Demand (AMoD) — Differentiation & Monetization

Autonomous Mobility on Demand (AMoD) is the brains that will drive the revolution towards self-driving cars. The brains here is technology (software + hardware) and vehicle & surrounding data that will improve safety and economics of ride. It is estimated that Mobility on Demand (e.g. Uber, Lyft) costs ~$2 / mile, car ownership ~$0.8 / mile, and AMoD will be ~$0.3 / mile. As a result, there are several companies working on developing the AMoD technology stack.

Different companies are developing AMoD solution with different approaches:

  • Proprietary and all-inhouse technology: Waymo (hardware + software, with recent partnership with Lyft, and trial in Phoenix), Renovo, Aurora, drive.ai, nuTonomy (with recent partnership with Lyft), helm.ai
  • Open sourced technology: comma.ai, Baidu (with the recent launch of Apollo platform that has more than 50 partners)
  • OEM controlled vehicle and all in-house technology: Tesla, Nio

I’ve had several discussions lately and it has further got me thinking on the strategic imperatives of these approaches. Essentially, first two above boil down to being the Android OS for the self-driving car and Tesla / Nio approach akin to being iOS.

The key question is especially in the Android scenario, how do these (any many more) companies differentiate and monetize? It’s safe to assume in that in due course, the technology from many of these companies will be comparable — i.e. safety, perception, actuation, and navigation from point A to B. So everyone will be going after a sliver of $0.3 / mile. How can one avoid getting commoditized and have value-based differentiation strategy?

I think there will be 3 broad themes that will emerge:

  1. App / Ad / Services ecosystem: Like the iOS or Android model, the value of app and ad-supported ecosystem will become more important. A AMoD solution getting a cut from in-ride ad-impression, which likely will be more effective & have higher value (similar to desktop) vs. mobile. Associated with this will be getting a cut from in-ride app purchases (Google and Apple get ~30%) or the fee associated with media consumption during rides (think airlines, but likely short-duration content for purchase or ad-supported. It will become important to have right partners for the AMoD ecosystem as this will further drive customer stickiness. That’s why it’s not far-fetched why Tesla is exploring new services, including music-streaming for it’s customers.
  2. Customer experience: With all else being equal from technology standpoint, a solution that provides personalized ride-experience will become a key point of differentiation. Braiq, for example, is developing solutions to personalize ride-experience in Level 4/5 autonomy vehicles. Some of the concepts for vehicle interiors, e.g. IDEO’s private vs. public space, or Nio’s design of concept car, Eve, with an extension to one’s living space; will become more important for differentiation. Some of the seemingly tangential services like integration with intermodal transportation system or last mile delivery services, will become more important for AMoD providers to differentiate. Imagine the experience where on your ride home in a self-driven car, you can order pizza on the touch-screen in front you and the AMoD system is integrated with a service partner like DoorDash and the delivery (perhaps by a sidewalk robot like the one from Marble.io) time can be chosen based on your ETA! These types of partnerships to fit into customer’s life will become even more critical for AMoD suppliers to stand up tall and differentiate.
  3. Subscription: Nothing better to retain customers than have them as subscribers and provide the best experience. 3–4 companies have mastered this well at scale in the US with a paid service, Amazon, Costco, Netflix, and Spotify. This idea was triggered by @semil ‘s recent tweet, that though Costco has 85MM members has a mkt cap of $69B and Amazon with ~65MM Prime customers and mkt cap of $470B, no other major tech player has a subscription play (yet). Subscription-based AMoD service will likely become important. Unlike other services where there are upper caps on consumption (e.g. xx GB / month from your broadband service provider or yy minutes / month from your mobile service provider), the subscription service for AMoD will likely have lower cap. In other words, customer will pay a fee for not taking minimum rides, because that leads to under-utilization of vehicles and also system overall doesn’t become more smarter with fewer rides. Amazon has overlaps / interests in several areas, including Prime customers, solving for last mile delivery problem, automation; but hasn’t yet made a play in personal mobility space. A space worth watching.

Next 3–4 years will be great as the technology for AMoD gets developed, piloted, and deployed on the roads. What happens after that will be even more impressive because that phase will define the formation of long-term viable businesses with customer at the center of it.

I can’t wait for that world and invite you to share your comments.