In our last post, we explored the feasibility of remote driving as a cutting-edge service for premium vehicles. We established that consumers want this service and that technology supports it.

This post expands on the economics of remote driving, demonstrating how OEMs can deliver a profitable remote driving service. We break down the costs and discuss potential revenue streams.

‍Calculating the Hourly Service Cost

To understand the economic viability, let's first consider the cost of employing remote drivers. In the USA, the 35th percentile of hourly wages for drivers is $15.62, according to ZipRecruiter. We opt for the 35th percentile rather than the average because remote driving technology enables selection of drivers from states with lower wage demands. Adding 50% to cover benefits, taxes, and administrative overhead, the total labor cost per hour is approximately $23.43.

Calculating the Cost of Connectivity

Next, we consider the technology overhead, primarily the cost of connectivity required for secure and efficient vehicle operation. Using Ottopia’s advanced systems, we reduce the necessary bandwidth to just 8 Mbps, or 3.6 GB per hour. Assuming a bulk data rate of about $2.5 per GB at scale, the cost of data transmission amounts to around $9 per hour.

‍Total Service Cost and Pricing Strategy

Combining these expenses, the total cost to provide the remote driving service amounts to $32.43 per hour. With a targeted 20% operating margin to ensure profitability and cover unforeseen expenses, we would price the service at $38.92 per hour.

Economic Comparison with Traditional Transportation

For context, taxi or Uber services typically charge more than double this rate for an hour-long journey. This price advantage positions remote driving as a highly competitive consumer option, while offering the added comfort of traveling in your own vehicle. 

Expanded Use Cases and Market Potential

Beyond competing with transportation services, remote driving enables several innovative use cases that are not economically viable today. Examples include: 

• Calling a remote driver to drop me off and go find parking
• Transferring my car to my spouse across town
• Using my car for a quick pick up or delivery.  

Each of these scenarios adds to the attractiveness of remote driving services.

Consumer Willingness to Pay

Our market research indicates that consumers value the convenience and time savings provided by remote driving and are willing to pay at least as much as they currently do for equivalent Uber services. In fact, many consumers are willing to pay more for remote driving than for Uber, as they prefer the premium experience of using their own vehicle. 

Long-Term Strategic Implications for OEMs

For OEMs, remote driving creates a new revenue stream. In fact, Frost & Sullivan recently estimated the opportunity at around $11 billion. But just as importantly, remote driving offers a strategic differentiator in the highly competitive premium car segment. By embracing this innovative service model, OEMs can differentiate their product offerings, enhance customer loyalty, and position themselves at the forefront of customer innovation - all while making good money on a new service.

Conclusion

In conclusion, the economics of remote driving are not only feasible but also potentially lucrative for OEMs. OEMs can tap into new service revenues and transform vehicle ownership by solving key customer challenges. With remote driving, OEMs can win the future mobility race. Get in touch to learn how.

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Source: Frost & Sullivan: 2024 Global Automotive Teleoperations Enabling Technology Leadership Award - Ottopia