Surge pricing, a controversial feature of ridehailing services, is being adapted for the robotaxi era, sparking concerns about fairness and public perception. Waymo, a leading autonomous vehicle company, is among those adopting surge pricing, charging higher fares during peak times to control demand. However, unlike ridehailing services, robotaxi operators cannot expand their vehicle supply to meet increased demand, raising questions about the justification for surge pricing.

The practice of surge pricing was introduced by Uber in 2012 and has been a point of contention for customers, who feel it amounts to price gouging. While ridehailing companies argue that surge pricing attracts more drivers to the platform, reducing wait times, the same logic doesn't apply to robotaxi operators. With a fixed fleet of vehicles, surge pricing can only serve to deter customers, rather than increase supply.

Harry Campbell, a ridehail expert and founder of The Rideshare Guy and The Driverless Digest, notes that surge pricing has always had a dual effect: convincing more drivers to work during peak times, while also tempering demand. However, in the context of robotaxi operators, the latter effect becomes more pronounced, as there is no possibility of increasing vehicle supply. "Waymo doesn't have a good justification [for surge pricing]," Campbell argues. "They just say, 'Hey, we're charging you more because a lot of people want rides, even though we literally cannot add more vehicles to the fleet.'"

Defenders of surge pricing, such as Brad Templeton, a consultant and veteran of the self-driving industry, argue that it helps allocate resources more efficiently, allowing those who are willing to pay more to get a ride during peak times. However, this approach raises concerns about fairness, as it disproportionately affects low-income individuals who may not be able to afford the higher fares. Templeton acknowledges that surge pricing "does allocate more to the wealthy than the poor," which may not align with public goals around fairness.

One potential solution to mitigate the negative effects of surge pricing is to create a hybrid system, where robotaxi operators partner with human drivers to expand their fleet during peak times. This approach could appeal to both ridehail and robotaxi companies, as it would allow them to tap into each other's strengths. Another possibility is for robotaxi operators to offer discounts to customers who are willing to share their ride with strangers, which could help reduce the demand for solo rides during peak times.

For now, robotaxi companies like Waymo are free to set their own prices during peak periods, but as the industry continues to evolve, it remains to be seen how surge pricing will be perceived by the public. As Templeton notes, "I think we should wait, watch, and learn" before making any judgments about the long-term implications of surge pricing in the robotaxi era.

The adoption of surge pricing by robotaxi operators highlights the need for a reevaluation of the practice in the context of autonomous vehicles. As the industry continues to grow and mature, it will be important to consider the fairness and equity implications of surge pricing, and to explore alternative solutions that prioritize the needs of all customers, regardless of income level.