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Self-driving startup Argo AI and its backers, Ford and Volkswagen (VW), are exploring a monetization model for autonomous vehicles (AVs) that will charge customers per mile driven, according toReuters.
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The model relies on a revenue-sharing deal with Ford and VW, as Argo’s self-driving tech will be implemented in the automakers’ vehicles. By receiving a fee per mile driven via Argo tech-equipped cars, Argo can generate revenue from any potential way an AV might be used, be it for package delivery, a ride-hailing service, or as a fixed-route shuttle. This prevents the company from having to bet on any single application of AV tech.
Argo’s approach to AV monetization differs from rivals Waymo and GM Cruise, the two leaders in AV development.
- Waymo is taking a calculated approach by targeting a handful of sectors to monetize its tech. Waymo is selling its LiDAR technology, developing tech for autonomous long-haul trucking, and has launched a widely publicized robotaxi service. While each of these is a unique business model in its own right, they all leverage the same underlying technology, enabling Waymo to save on development costs while diversifying its paths to profitability.
- GM-owned Cruise appears to be following an extremely focused development path aimed at monetizing its tech through a single service. Cruise is currently working to launch a commercial robotaxi service. While entering just one AV market provides a limited opportunity for monetization, if Cruise can bring a quality robotaxi service to market quickly, it could prove to be among the most lucrative AV opportunities. The global robotaxi market is expected to be worth $2 trillion by 2030.
Ultimately, Waymo’s approach to AV development may be the most efficient use of resources, striking a balance between diversification and specialization. Too much diversification can spread resources too thin, leaving a company unable to fully capitalize on an opportunity, as developing an AV is a “time-, talent- and capital-intensive business” according to Argo AI founder Bryan Salesky.
And being too specialized can limit a firm’s ability to pivot to new applications if its original focus proves to be a bust: When Daimler CEO Ola Kallenius saw “some uncertainties around the earnings potential” of its robotaxi business, the company was able to pivot and intensify its focus on its self-driving commercial vehicle project. By carefully selecting a handful of paths for monetizing AV tech, a company will be better positioned to bring several well-developed AV products to market.
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