Cities testing out autonomous buses, but is it worth the risk?

By Sam Sklar

Six weeks ago, Arlington, TX, approved a 6-month lease (with an option to renew for another 6 months) of two EZ10 driverless shuttles to fill a gap for more precise transportation needs for residents of and visitors to the city. According to the city’s staff report, the EZ10 is a “low-speed driverless shuttle with a twelve-person capacity and a maximum speed of approximately 20 miles per hour.” EasyMile, the EZ10’s maker, describes it as an “electric people mover […with] no steering wheel and neither dedicated front nor back.”

These vehicles will cost the city about $270,000 over the course of two years, should the city decide to extend this pilot project that long. The Eno Center for Transportation’s Greg Rogers and Paul Lewis did a “back of the envelope” cost analysis comparing the EZ10 with the capital and operating expenses of a traditional passenger van.

The analysis revealed (using assumptions for the lease, labor, and gas) that over the full year, should Arlington decide to pick up the 6-month extension, the cost difference amounted to just over $45,000, or a little more than the yearly salary of one shuttle driver for one year. (In his example, Lewis calculates the cost of the traditional van operation to be just under $227,000 compared to EasyMile’s cost at just over $272,000.)

This analysis begs a question in Eno’s post from early April: Is the opportunity cost to invest in AV technology worth the increased cost, and presumably tax burden, to Arlington’s population? What are some of the associated potential short-, medium-, and long-term challenges? Let’s take a look at the different kinds of risk Arlington’s decision imposes:

Stakeholder Risk: The EZ10’s costs are couched in the vehicle lease and minimal costs to charge via its electric port, meaning that the cost burdens are almost completely different compared to a more traditional vehicle lease plus gas and labor. These two alternatives are not comparable once the outcome (moving people from point A to point B) is taken into consideration. They each have different pulley effects on how the city decides to invest in its future, and the city will have to prioritize among competing interests from possibly combative stakeholder groups.

Technology Risk: There is a small, but not insignificant, risk that a more efficient, safer, cheaper model will replace the EZ10 technology within the year. By leasing (and not buying), Arlington mitigates this risk with the option to trade up should the pilot be a success.

Legislative Risk 1: There is also a larger risk that Texas, whose main export is petroleum and gas, will pass legislation limiting the use of EV technology. So not buying the vehicle now runs an exposure to not having an EV/AV at all in the foreseeable future. Outside of Texas (and other petroleum-rich states), this risk might not be as significant.

Legislative Risk 2: Further, there is a political risk of overrunning employment for drivers across the city, should the technology expand. A local legislature might decide to head off this job loss by passing legislation limiting the number of “driver” positions that can be held by robotics (or something similar).

Interest Rate Risk: Another small, but not insignificant, risk is the cost of money associated with leasing over buying a vehicle (or two in the case of Arlington). For government entities that choose to pilot and then implement a fleet of AVs, leasing might decrease long-term risk, but ultimately make a shorter-term risk unbearable should interest rates continue to rise or be volatile.

For the time being these risks seem to be moot. The City of Arlington has already signed a sole-source contract with EasyMile. As Eno’s Rogers writes, “Certainly this is not yet the low-cost mobility solution that advocates of autonomous vehicles have been predicting.” But it’s a start. For other cities thinking about AV technology for mobility needs, Arlington’s position as an early adopter provides a roadmap for costs and risks associated with implementing a technology many have predicted will dominate the roads in the coming decades.

Sam Sklar is a Program Associate for SSTI.