Surge pricing, the scourge of ridehailing, is evolving for the robotaxi era
Surge pricing, the scourge of ridehailing, is evolving for the robotaxi era
Surge pricing, a common frustration for ridehailing users, is evolving to accommodate robotaxi era.
The use of surge pricing by companies like Waymo and Cruise, which offer driverless vehicle services, raises questions about its purpose.
Surge pricing was initially intended to attract more drivers to the platform, but this justification no longer applies to robotaxis with fully deployed fleets.
In the case of robotaxi services, surge pricing is used to charge riders extra during peak times, rather than expanding the driver pool.
Riders who cannot afford the higher fares may need to search for alternative transportation options, highlighting a potential drawback of surge pricing in the robotaxi era.
It’s a familiar frustration for ridehail users: you open the Uber or Lyft app, enter your destination, and discover that your intended trip costs several times more than expected. The culprit is surge pricing, one of ridehail’s most important and controversial innovations. Customers grumble about higher fares, but Uber and Lyft executives have insisted that surge pricing benefits them by attracting additional drivers, which allows the companies to fulfill more trips and reduce wait times.
That justification makes intuitive sense, but it raises an awkward question about robotaxis, which are expanding across the US, from San Jose, California, to Washington, DC. If surge pricing is intended to expand the driver pool, why is it now being used by companies with driverless vehicles?
Waymo, which offers robotaxi trips in the Bay Area, Los Angeles, and Phoenix, charges surge pricing during peak times, as did Cruise, its now-defunct competitor. Assuming a robotaxi fleet is already fully deployed, higher fares cannot expand vehicle supply in the way they could for Uber or Lyft. Instead, riders simply need to pay extra, assuming they can afford to, or search for another way to travel.
A. Surge pricing is a pricing strategy used by ridehailing companies like Uber and Lyft, where fares increase significantly during peak hours or high demand periods.
Q. Why do ridehailing companies use surge pricing?
A. Ridehailing companies use surge pricing to attract additional drivers, which allows them to fulfill more trips and reduce wait times.
Q. How does surge pricing benefit ridehailing companies?
A. Surge pricing benefits ridehailing companies by increasing the number of available drivers, reducing wait times for riders, and potentially attracting new customers.
Q. Is surge pricing still relevant in the robotaxi era?
A. The article questions whether surge pricing is still necessary in the robotaxi era, as it may not be effective in expanding the driver pool with fully deployed fleets.
Q. How do companies like Waymo charge for surge pricing?
A. Companies like Waymo charge surge pricing during peak times, similar to how their competitors did before they went out of business.
Q. What is the main difference between surge pricing and robotaxi pricing?
A. The main difference is that surge pricing in ridehailing aims to expand the driver pool, while robotaxi pricing focuses on charging extra for peak demand periods.
Q. Can surge pricing still increase vehicle supply in robotaxis?
A. No, assuming a robotaxi fleet is already fully deployed, higher fares cannot expand vehicle supply in the same way they could for ridehailing companies with human drivers.
Q. Why do riders need to pay extra during surge pricing?
A. Riders need to pay extra during surge pricing because it’s a way for companies like Waymo and Cruise to charge more for peak demand periods, assuming they can afford to.
Q. What is the purpose of using surge pricing in robotaxis?
A. The article suggests that surge pricing may not be necessary or effective in expanding the driver pool with fully deployed fleets, but rather serves as a way to charge extra for peak demand periods.
Q. How do companies like Waymo and Cruise respond to criticism about surge pricing?
A. The article does not explicitly state how companies like Waymo and Cruise respond to criticism about surge pricing, but it implies that they may be reevaluating their pricing strategies in the robotaxi era.
