Scale Determines Technology

The robotaxi business is getting another entrant, but also a different kind of entrant. Zoox, a decade old startup purchased by Amazon in 2020, is expected to launch this year. It has developed a vehicle specifically aimed at the autonomous ride share market without a driver seat or controls, sliding doors in the middle, a seats facing each other. No one will mistake the Zoox car pictured below for a sports car, but its features are specific to the purpose.

Most entrants, like GM's Cruise pictured below, have modified "off-the-shelf" cars that will have inefficient vestigial elements from when they had human drivers. 

Retrofitted cars that make sense at small scale, may imply relatively higher marginal costs at large scale.They represent a low fixed cost/high marginal cost technology. Zoox's design represents a higher fixed cost/lower marginal cost technology. Its features are more efficient for short-haul, dense traffic, intracity rides but require more substantial upfront investment. Zoox is banking on realizing economies of scale once the service takes off. 

GM canceling plans for its Cruise suggest that at least they expect a greater scale.