For this exercise, you$$re the CEO of WAYMO, a division of the Alphabet Company. You$$ve designed, tested, and patented a self$-$driving system for commercial trucks. $($Over the road semi$-$ trucks such as Peterbilt, Mack, Volvo, and Kenworth.$)$ Production and usage have been approved by the government.

Your fixed costs for production are $$50,000,000.$ Your variable cost$-$per$-$unit at $10,000$ units is $$60,000.$ You estimate an experience curve effect of $5\%$ at higher production volumes. You estimate the total market to be $4,000,000$ units $($current semi$-$trucks in the U$.$S$.).$

While there are numerous competitors $($including the semi$-$truck manufacturers$)$ working on similar systems, given your head start and patent protection, you believe you$$ll have $12-$to$-18$ months before a competitive offering is approved and on the market. Once competitors do enter the market, however, they$$ll be formidable.

Savings to the trucking companies are estimated at over $$200,000$ per truck. This takes into account the fact that the vehicle may be operated $24/7$ as there will be no driver restrictions related to time on the road.

Your assignment is to come up with a retail price for the unit. Show the analysis you used in arriving at the price and explain how you arrived at the price.