Application Paper - BUAD 307
April 20, 2015
Self-Driving Taxis (Uber): Secondary Market Research
Proposal Description: Self-driving taxis will be provided by Uber and would create an additional type of transportation offered to consumers. These taxis will not require a human driver to be present at the wheel. The car will include the latest technology, including GPS systems and smart traffic control, which will get the customer from point A to point B upon request and with minimal delays.
The concept of self-driving cars has become very popular in the recent years. About 10 years ago, people were suspect about the safety and overall feasibility of the self-driving ...view middle of the document...
In contrast, taxis can get around 30 rides per day (Lee,T.). These statistics show how beneficial these vehicles are not only for the busy streets by emptying the streets from traffic during the rush hours but also creating a greener environment by using less fuel. It can also free up the parking spaces, especially in the cities where parking shortages exist, like, for example, San Francisco or New York.
Google estimated that self-driving cars can decrease car accidents by as much as 90%. They bring to comparison a malaria disease. They state that there are 1.24 million deaths each year due to the car accidents, while people who die from malaria come up to about 630 thousand. Specifically, they say that even if self-driving cars can decrease the accidents by at least 50%, it will be already considered as basically a cure from malaria (Bowman, S.)
From the company’s perspective, self-driving cars will provide a better financial picture, as the driver’s labor is usually the highest cost in the conventional taxi business. But here, since there will be no drivers to pay the salary, and the fact that vehicles will operate every day for 24 hours, makes it very beneficial for the company in terms of financial output. Another important benefit to keep in mind is the insurance coverage. With overall safer experience provided by such vehicles, the insurance will also tend to go lower, giving the company an option to use freed up money for other purposes (PRWeb).
On the other hand, new ventures usually require a large initial financial input, which requires companies to seek for capital. Other costs are related to unknown potential risks. Therefore, sufficient testing of the product will be required to catch these risks in advance.
The table below summarizes the points of benefits and costs for the reference:
Benefits | Costs |
Safety. Autonomous driving can lead to less accidents, which in turn can lead to lower insurance costs and premiums | Research costs. Testing of the product might be costly and time-consuming |
Increased road space. People who will choose to ride self-driving taxis will be able to share with others, thus eliminating the need of taking self-owned cars on the road | Loss of jobs. Current drivers will be replaced by the autonomous driving |
Environmental benefits. The cars will be electrically operated, thus decreasing effects of pollution | Potential risks of safety. This risk is always present and has to be factored in when promoting the product |
More parking spaces. Since people will be using the service of the taxi, there will be less demand for parking spots. | Security risks. This type of a vehicle becomes vulnerable to be used as a device transporting bombs or used for terrorist attacks. |
Monetary savings for consumer as well as the company. By sharing the vehicle with others, people can save money on trips. Also it will be more cost efficient than paying for gas and maintenance of personally owned...