Argo AI will charge per mile for using its self-driving cars as a way to fund itself

In brief: While most self-driving car tech companies are scrambling to build ride-hailing fleets, Argo wants to let consumers decide how to use its vehicles by letting them pay for distance traveled, regardless of the specific usage. In doing that, it might have a better chance of surviving on the path to profitability.

Self-driving cars are a hot topic right now, and there are many companies racing to be the first to populate the streets with fleets upon fleets of so-called “robotaxis.”

However, one of the biggest problems faced by these companies is the fact that self-driving car technology has huge research and development costs and at the same time very few avenues towards profitability. You only need to take a look at the Waymo-DeepMind partnership to see that improving the accuracy of self-driving AIs requires Google’s moonshot philosophy – ignoring profit motives in exchange for seeking novel, creative approaches to solving major roadblocks in the path to commercially viable solutions.

If we look at the most prominent firms in this space, Uber tried to cut on those costs by aping or even cloning tech from rival Waymo, which has turned out to be even more expensive in the long run. Tesla is still struggling to implement full self-driving Autopilot properly while juggling the expenses of making all kinds of electric cars, and Chinese giant Didi Chuxing is betting on scale and free rides during its pilot program to achieve profitability.

In the case of Argo AI, the strategy is even more peculiar. The company benefits from a $3.6 billion investment from Ford and Volkswagen, but doesn’t plan on building a fleet of robotaxis, despite the market being expected to reach a $2 trillion cap by 2030. Instead, it wants to rent its self-driving cars for general purposes and get paid by the mile.

Argo CEO Bryan Salesky said in an interview that he hates the term “robotaxi,” as it is a narrow view on the many possible applications for autonomous vehicles, such as delivering goods, transporting groups of people in vans, and even mining.

A Ford executive explained in August that self-driving cars are going to be used so much that they might only last around four years. Given that estimate, it’s easy to see why Argo is choosing this new approach to monetizing its self-driving tech. Salesky says no one in the industry has a clear understanding on which applications will be more profitable than others.

By letting consumers use its cars as they see fit, Argo is trying to get a better idea on which areas to divert its focus in the future. Judging from estimates given by Ford and Volkswagen executives, there will be several deployments of Argo-equipped vehicles in the 2021-2023 timeframe, including some small ride-hailing fleets.

In the meantime, investors are betting big on Waymo, which is being valued at around anywhere from $100 billion to $105 billion. The company is taking the smart fleet approach, and is reportedly the closest to offering truly driverless rides with no safety driver.