In China, Baidu is working with chips manufacturers, computer scientists, and car manufacturers, to convert existing cars into driver-less vehicles. I think that the market is not as black and white as you suggest.
I think there is incentive for both types of companies to go into this kind of manufacturing or retro-fitting. Mostly because — in China and elsewhere — there are government mandates to do this, and there are financial incentives given to any party that tries. While I would agree that startups will operate on the bleeding edge of advancement, they do not have the massive funds necessary to be major players in mass transportation, and will be acquired as needed. One use case intrigues me, the classic commuter carpool. How lame!
While it’s far off, driver-less cars plus on-demand matching (SmartCar Pool) solves so many problems, posed by the classic carpool, mainly synchronizing a finite number of people (2 to 4) from one area to one place of work. If one person has a last minute glitch, working late, sick kid, etc. the smartcar pool finds a work-around from a large pool of subscribers. Individuals can opt in and out in real time. Worst case, a single rider driver-less car handle the midnight run. Subscriptions could per-ride or monthly, as needed.
Long term, companies could have smaller parking lots. Busy downtown's, whether urban or suburban, like downtown Palo Alto or Mountain View, create a cost / inconvenience burden for employees. SmartCarPools could ease that pain. Couples could drop down to one car. We won’t have to worry about aging Boomers creating a mega senior driver hazard on the road. You might think, “Well what about UBER?” In the future I envision, cars become a commoditized product, where the wealthiest 10% own private luxury vehicles, and everyone else uses shared public vehicles, as cost/benefit hugely dissuades private ownership. In this scenario, full control moves to the automakers, as they produce completely identical cars as they drive to their city of operation and begin making money for the automaker.
What about Tesla? Tesla has a unique value proposition here, from production to distribution and charging stations.It won't take much for them to create a customer base because it's already a widely recognized brand with a pretty unique CEO. Why would the automakers even consider selling cars to any other businesses when they control the whole product chain? Bye, bye UBER! Unless of course, UBER buys one or more of them before it burns up its billions! When we moved from buying CD’s to subscribing to streaming music, the question of how do we buy music stopped being the right question. It became which music service should I subscribe to? Transportation as a service will be no different. I agree with your statement — it is the start-ups that would accept the risk. I set up an EV only taxi business in London 3 years ago called eConnect cars.
I certainly believe that companies such as ourselves will be operating the driver-less taxis of the (near) future but the strength of the brands and relative value in the economic rent may move. So people may use a ‘google’ taxi, but this may be operated by eConnect cars using an electric vehicle built by Nissan but the end user will only really be aware of the Google brand. It puts me in mind of a few things. Better Place — or the Icarus of the EV World, both unique and to my mind extraordinary in its proposition. A 21st Filling Station — with a sophisticated back-office in regard to energy management.
Far too simplistic to simply consign the ambition to history given the spectacular fall from grace with it all — it was prescient. I’ve been a part of a few start-ups, with each one a tough gig — and ultimately frustrating. In regard to EV’s and their new best friends Robbie The Robot and Eric The Electron — I’m at it again with EVEN (clicks & mortar all makes EV Service & Sales, and EVHUB (Supercharger all makes filling stations). The latter taking a few cues from BP — an EV outrider if ever there was one.