Unwinding the Tangled Web: How Robotaxis Failed to Make California's Streets Safer and Decarbonisation Technologies Turned Out to Be More Expensive Than Anticipated

This edition picks up threads from stories on the rise and fall of robotaxis and train robberies prevalence in California, and the true (high) costs of decarbonisation technologies

The Rise and Fall of Robotaxis

Several months ago, Kyle Vogt, Cruise’s chief executive got emotional when recounting the story of a 4-year-old girl in a stroller that was killed in a car accident. In the same interview with the NY Times, he stressed how autonomous vehicles aim to make the streets safer because “they do not get distracted, drowsy or drunk, he said, and being programmed to put safety first meant they could substantially reduce car-related fatalities.” (NY Times). That’s true, autonomous vehicles don’t get drowsy or drunk. Despite this, self-driving vehicles don’t necessarily improve safety. This has been the determination of the Californian Department of Motor Vehicles that has suspended Cruise’s robotaxi license after an autonomous vehicle ran over a pedestrian and other events involving autonomous vehicles claiming they pose “an unreasonable risk to public safety”.

I’ve made the argument that autonomous vehicles raise significantly more problems than they solve, from unclear legal liability in case of accidents, to heightened cybersecurity risks and perhaps most counterintuitively, increased costs and staffing. This last aspect was confirmed in a NY Times article:

“Each Chevrolet Bolt that Cruise operates costs $150,000 to $200,000, according to a person familiar with its operations.” (NY Times)

“Half of Cruise’s 400 cars were in San Francisco when the driverless operations were stopped. Those vehicles were supported by a vast operations staff, with 1.5 workers per vehicle. The workers intervened to assist the company’s vehicles every 2.5 to five miles, according to two people familiar with is operations. In other words, they frequently had to do something to remotely control a car after receiving a cellular signal that it was having problems.” (NY Times)

Yes, it costs 150 to 200,000 dollars to operate a driverless vehicle. Bear in mind that the bulk much of the cost of operating a regular taxi is the drivers’ salary that should ostensibly be saved when operating a robotaxi. Yes, it takes 1 worker to drive a vehicle and 1.5 workers to drive an autonomous vehicle.

However, in all this, one may see a glimpse of the future of robotaxis: outsourcing. Similar to many companies claiming to use AI for image recognition when in fact they’re using “a group of humans sitting somewhere—usually in a windowless room, just doing a bunch of point-and-click”, autonomous vehicle operators may head down the path of outsourcing autonomy to ‘a group of humans in a windowless room’ – potentially in a country with fewer regulations and requirements. Is this maybe why auto makers are installing cameras instead of side mirrors, so that remote drivers have better context when operating vehicles from afar?

The Great Train Robbery: US Cargo Edition

Although it sounds like a video game title, it’s really the description of a sad reality facing the US in general, and California in particular. Last year I briefly covered the topic after a video of people looting a slow-moving container train in Los Angeles appeared on the web. The train looting problem skyrocketed in 2022 when just the LA county - where the country’s largest container terminal complex is situated that handles close to half of the U.S.’ container traffic – saw an increase in theft by 160%. Theft figures from LA county alone tell half the story because in 2021, heightened security measures led thieves to relocate to southeastern Arizona and into New Mexico.

The problem continues in 2023. Flexport, the tech logistics platform, released a brief article titled “The great train robbery: everything we know so far” (that inspired the title of this section) where the security measures companies take to protect themselves from theft are explained. Some cargo owners mount braided steel container locks, others use light sensors to detect when container doors are open, others take it a step further and GPS track individual packages. Rail operators have their own private police force that can operate across state lines to respond to incidents and apprehend thieves. The cherry on the cake in the Flexport article is the recommendation that companies shipping high-value goods such as food, beverages, clothing, or electronics should consider TRUCKING rather than rail.

“If a customer has high-value goods, like electronics, I’m encouraging them to use trucking over rail right now. We know rail is the cleaner, environmentally friendly, and cheaper option, but you have to take into account the opportunity costs if you lose a container of inventory.” (Bill Schieder, VP of Global Physical Security, Flexport)

Supply chains in the U.S. are starting to resemble those one would expect to see in the underdeveloped third world where delays and theft are rampant and transport costs are generally quite high. Interestingly, despite U.S. President Biden’s repeated statements on the critical importance of climate change including that “climate change poses a greater threat than nuclear war” are met with supply chain realities that interfere with the U.S. Government vision for a net zero future.

Unfavorable Winds for Decarbonisation

The German Government agreed a 7.5 billion Euro guarantee (US$ 8 billion dollars or AU$ 12.5 billion) for Siemens Energy, one of the largest manufactures of wind turbines. This guarantee comes after Siemens revealed an impairment of 4.5 billion Euro from warranty repairs of faulty wind turbines. This somewhat precarious financial position is not unique to Siemens, as Vestas, also one of the largest manufacturers in the world has been consistently losing money as well.

The German Government’s intervention comes in recognition that the Siemens Energy situation is especially problematic for decarbonisation. Wind power is more or less the key energy source that should keep the lights on at night by 2050. Should Siemens Energy fail to obtain bank underwriting for its projects, its wind turbine production and deliveries would likely decline thus threatening decarbonisation progress.

The issue of heavy losses is not something isolated to wind turbine manufacturers. Solar panels and electric vehicle manufacturers seem to be facing similar issues. Ford is apparently loosing between US$ 36,000 and 70,000 per electric vehicle it sells (depending on which source you check). Lucid is losing US$ 430,000 per vehicle. VW, although silent about its EV-related earnings, has highlighted that their electric vehicle orderbook has halved compared to last year (currently at 150,000 vehicles compared to 300,000) and the company has delayed plans for its fourth EV battery plant.

Consider the context in which this is all happening, mainly that the largest fossil fuel producers have all reported record-breaking profits. In 2022, Exxon, Chevron, Shell, BP and TotalEnergie, the five largest oil and gas producers delivered US$ 195 billion in profits. In the case of Exxon, its profit TRIPLED compared to 2021. Australian coal miners Whitehaven Coal and Glencore also reported record profits in 2022.

It’s almost as if all this talk of decarbonisation has increased demand for fossil fuels. Who would have thought that would be the case?