Robotaxis could slowly be coming for Uber and Lyft drivers' earnings

• Competition from driverless taxis could reduce Uber and Lyft drivers' earnings in the years to come.
• Many drivers told BI that the gig has become less profitable recently due to increased competition.
• Regulatory hurdles and operating challenges could slow the rollout of robotaxis across the US.

As the adoption of driverless taxis spreads across the US, ride-hailing experts told Business Insider that Uber and Lyft drivers could see their earning opportunities slowly deteriorate.

Carl Benedikt Frey, a professor of AI and work at the Oxford Internet Institute, told BI there's little evidence that robotaxis like Waymo One have had a material impact on Uber and Lyft drivers' earnings in the markets they're operating. Drivers still outnumber these vehicles, and Frey said Waymo One rides can be more expensive than traditional ride-hailing trips — which may deter some customers. He added that these prices are unlikely to stay so high forever, and as more robotaxis hit the road, it could become more difficult for Uber and Lyft drivers to earn a living or supplement their incomes.

"When prices start coming down, as the technology gets better and cheaper, drivers will feel it in their wallets," Frey said. "We've seen this movie before. When Uber first showed up, it reduced traditional taxi drivers' earnings by about 10%."

This would be yet another challenge for drivers, many of whom have told Business Insider that ride-hailing has become less profitable in recent years.

Some said that an increase in the number of ride-hailing drivers is among the factors pushing down their pay because the added competition has led to fewer available and lower-paying trips. In the years to come, robotaxis could make the gig even more competitive.

"If there are more cars on the street to give rides, an increasing supply lowers the market price for working," said Andrew Garin, an assistant professor of economics at Carnegie Mellon University's Heinz College.

Garin said that many ride-hailing drivers work part-time and don't rely on the gig as their primary source of income. However, he said ride-hailing could become less lucrative for people who've used it as a valuable side hustle.

In addition to Waymo's driverless taxi, Tesla and the Amazon-owned Zoox are also developing their own versions of a robotaxi.

Waymo and Uber did not respond to BI's request for comment. In February, an Uber spokesperson told BI that the company hadn't seen any significant impacts on drivers' earnings in Phoenix and Las Vegas, the two cities where the company had autonomous vehicle partnerships at the time.

A Lyft spokesperson did not respond to BI's question about the impacts driverless taxis could have on ride-hailing drivers.

The robotaxi revolution won't happen overnight

There's no shortage of companies competing for a slice of the growing robotaxi pie. In the past two months, Waymo One, Alphabet's autonomous taxi service, announced that it would be expanding its reach in Los Angeles and rolling out its service to the Atlanta and Austin markets exclusively through the Uber app. It also announced in October that it provides more than 100,000 weekly rides in Los Angeles, San Francisco, and Phoenix — mostly through its own ride-hailing app.

In addition to Waymo One, Uber has partnered with the driverless tech companies Cruise, Motional, Aurora, and Avride, and is collaborating on autonomous driving with the Chinese automaker BYD. Lyft recently announced similar partnerships with Mobileye and May Mobility. Despite the widespread investment in the robotaxi sector, the industry could be slowed down by regulatory hurdles and safety concerns. Additionally, riders could have a preference for a human driver.

Ride-hailing experts told BI that it's difficult to forecast how quickly robotaxis will spread across the US, particularly to areas with less favorable weather conditions than Los Angeles or Phoenix.

Sergio Avedian, an Uber driver and senior contributor to the gig-driver-advocacy blog and YouTube channel The Rideshare Guy, said robotaxis aren't a big threat to ride-hailing drivers in the short term. He thinks it will take robotaxi companies at least a decade to significantly reduce operating costs and scale up their fleets.

"Long-term, definitely it's going to be a threat, and that's why we suggest everybody not treat Uber and Lyft driving as a career," he said.

Analysts from the research and brokerage firm Bernstein estimated that it would take between 350,000 and 400,000 robotaxis to effectively replace the current ride-hailing networks across the US. Waymo's fleet consists of roughly 700 vehicles.

Nicole Moore, a part-time Lyft driver and the president of the driver advocacy group Rideshare Drivers United, said that robotaxis receiving widespread approval to do trips to and from airports — many drivers' "bread and butter" — would be a concerning development for drivers. Waymo One airport trips are still restricted in Los Angeles and San Francisco but are available in Phoenix.

Frey said some progress has already been made in reducing the operating costs of driverless vehicles. He pointed to China as one example, where the robotaxi company Apollo Go is building "much cheaper" vehicles than Waymo's, which has raised concerns among the country's gig economy workforce.

Lindsey Cameron, an assistant professor of management at Wharton School of the University of Pennsylvania, said that the driverless vehicle industry has a track record of progressing slower than some expect.

"I feel like for the past 20 years, we've been saying, 'In five years, there'll be autonomous vehicles everywhere,' and then five years pass, and we're still waiting," she said.

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