Clarifications/Assumption

1. What is the distance of that highway where two states are getting connected?

Assuming 350 Kilometers where on average a car is driven at a speed of 70-100 kilometers per hour. Hence, the car drives spends around 7 to 8 hours to cover the distance. It is located in India.

 

2. Are these two connecting states act as a commercial hub or the nearest connecting city is the capital of the state?

Assumption Yes the city of state 1 is a well known manufacturing, industrial area, that falls under special economic zone (SEZ provides land to the manufacturers and entrepreneurs at a concessional rate) connecting to the biggest education hub of the state which is also the capital of the state and know for agricultural activities.

 

3.  Why only self driving cars are allowed through that road. Indeed, it is the only way for cars but why we can’t allow other vechiles along with cars?

Assuming There are other routes for heavy vechiles but it is congested in traffic so small vechiles like cars stuck for a long time and such routes causes more accidents during the night time whereas the new route opened for only self driving cars is in the steep hilly regions that involves tunnels as well.

 

4. Are there any rail cross points present in that route?

Assuming Yes

 

5. Are there any toll points in that route?

Assuming yes

 

User groups?

1. Families and friends
2. Business professionals and government servants from the respective state
3. College students, working people who are studying in one state and travelling to their home

 

Describe the product: A well constructed highway where only self driving cars are allowed as means of transport that connects two important states.

 

Strength- A prominent intersections point connecting two states can be attractive opportunity for new business avenues

Weakness- Travelling during night time might not be safe through self driving cars as it is not a congested area and hence it becomes tricky to manage any emergency situation like theft or other crimes etc.

 

List of strategic choices with goal to increase revenue

1. Recreational Parks with stay in hotel or guest house can be a prospective business area as the number of travellers will be more considering the two important state are getting connected through that highway. The importance of connecting states will increase the traffic and frequency as the distance is also not too much that makes it difficult to travel through car.
2.  Small rest points and refreshment centers is needed as the travel time is around 8 KM that makes the commuters tired while sitting at one place.
3.  A chain of garage can be opened this will ensure if the cars are facing any technical issues then straight can be taken to the garages for repair. An app to manage the garages or central helpline phone number can ensure availability of help at distant place.
4.  Presence of fuel station like petrol, diesal, CNG and electric charging station can be a good area to generate business and revenue
5. The waiting time at the toll point or rail crossing can be used for the marketing and publicity activity of the available business opportunities
6.  Presence of public paid toilets is yet another opportunity for the commuters that generate revenue.
7. The long (assuming the tunnel is too long around 50 kilometers) tunnel where the car travels during the late evening time should carry proper security systems with voice control and censored machines at specific points to trigger need of help due to any uncertain condition like theft, accident or other crimes.
8. Presence of a hospital is also a good opportunity atleast for the minimum treatment in case of sudden illness or accidents. This can be tied near the guest house and the refreshment centers.

Evaluations and Recommendation

I would recommend to establish the afore said business opportunities at the highway considering it will provide better user experience for the commuters.  Also, there is no competitive landscape as this has been just started and at a very nascent stage . The management cost and the construction cost will be high but it is going to be one time investment. The execution will take time and efforts. But, still we should go ahead because these are bare minimum requirements which will address  the customers pain points and generate revenue. Later on it might give birth to new real estate opportunities like construction of warehouse, plots for the investment etc. At least to kick start we can start with paid public toilets. Rest points with refreshment which is relatively easy to execute and important from the users standpoint. Fuel station is another important area but permissions and government approvals might take some time.

 

I would start answering the question by highlighting few keywords in the question.

1) Major Urban city

2) Interstate Highway

3)only available for self driving cars

Clarifying questions-

1)Are there any toll gates in this highway? if yes – manual or automated?

2)What is the average duration of the Journey?

3)What is the position of police surveillance? How fast can 911 reach the spot in case of emergency?

Before identifying the potential business opportunities, I would like to identify the consumer base.

1) Daily commuters (job holders)

2) Occassional travellers (tourists, visitors..)

Business potential opportunity-

1) To start an Auto cab service on this highway and launch an application for booking, tracking, payment, SOS puproses.

a. Users can book/schedule a cab and reach the starting point of the highway.

b. Board the car. Digital monitor will ask for OTP to start the ride.

c. Monitor to pop a few questions like – What music you like, etc..

d. Tracking system kicks in and User will have an SOS option on the car, in a mobile app.

e. If not paid already, gives the option to pay before ending the ride.

f. Reaches destination. Ride ends.

2) Build automated surveillance system to help traffic police dept. Make revenue on the basis of user engagement.

a. Partner with departements to develop the surveillance system

b. Use AI, ML to predict/report any incidents

c. Report to control room instantly.

Let us evaluate the impact and effort for above ideas.

1) — Huge potential – very less people own self driving cars, people can even come to experience the journey. — Targets both user bases we discussed. Effort — Very high. Cost — very high. Accountability – very high.

2) Relatively medium business potential, Effort – High (have to partner with all self driving models available in market / install high speed sensitive sensors along the way) Cost — medium. Accountability – Relatively less.

I would choose one of the above ideas by taking below things into consideration.

1) How big the company is already?

2) How technically advanced and accurate our research is?

3) What is the normal user base that usually commute on this highway.

I will answer this question as an estimation question

Let me use San Franscisco as the target urban city.

Population of SFO -870 Mn

Number of households, assuming each household has an average of 4 people= 217 Mn households.

Labor data shows that even households earning 117K/year qualify as poor in SFO. Thus I will consider only a  household earning >200K as potential buyers of a self driving car which is about 15% of the overall population (since self driving cars will are expected to cost 60K+ for a car)

Thus 217 Mn *15%- ~32Mn households can afford self driving cars of which all of them will have one car.

The average healthy life of a car is 7 years, thus in a given year 1/7 *32Mn might be in the market for a new car= $4.5Mn of which 20% might end up buying a self driving one. ~900K cars.

Business oppurtunities

1) Showrooms of new cars on the highway- potential business- 900K *60K/car= $54 bn/year

2) Sale of Electricity, assuming all self driving cars run on electricity. Cost of using electric car is $0.03/mile. Assuming people drive about 20 miles/day * 900K cars getting added/year * 20 days in a month * 12 months in an year = $129 Mn worth of electricity sales

3) Business for repairing, maintenace, tires etc-900K cars * $1000/yr per car= $900 Mn

4) Other business oppurtunities would be advertising billboard, food and beverages, tolls for using the highway, car breakdown, car insurance, medical business for hospital near the highway, housing complexes near exit and few other miscellaneous businesses.