Bestmile
Published in

Bestmile

Automakers envision a business model for AVs: selling miles, not cars

If AVs eventually dominate the car industry, automakers could start charging for miles traveled instead of vehicles sold — potentially a much bigger revenue opportunity.

The big picture: Automakers and tech companies are investing in AV technology because it offers, among many things, a new revenue stream if people shift from owning vehicles to buying access to transportation.

Background: Currently automakers make $512 billion selling about 17 million vehicles per year, for an average of around $30,000 each.

How it works: There are some 260 million cars on U.S. roads, traveling an average 3.9 trillion miles per year.

The bottom line: The Center for Automotive Research found that “OEMs and venture capitalists expect innovative mobility services will start yielding double-digit profit margins, much higher than the 4% to 9% automakers’ core business currently generates” — up to 20%.

This story originally appeared in Axios.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store