There is absolutely no way Uber will have fully self-driving cars in a few years (a car that picks you up without a driver). If anything is going to save Uber, it's going to be Otto. Self-driving trucks are a much easier technical problem and the market is the better part of a trillion dollars just in the US.
Beyond the geo-fenced solution, and system like Super Cruise, I doubt that we'll see truly self-driving cars for another 30 - 40 years.
What fascinates me is that company like Uber believe that they can use their current business model to finance the development of a self-driving car and the start to make profit when those cars a ready. That would mean investors pumping money into the company for at least 25 years more.
It makes more sense to slowly develop self-driving cars for technologies like Autopilot and Super Cruise. Gradually improving the solution until one day it can safely navigate a leaf covers dirt road.
Tesla unveiling their all electric trucks soon and they will have autopilot although obviously not ready for full automation.
Uber is out looking for a business model and that's great; it's just that without self driving capabilities in reality they are just a temp agency with a bad rep operating deep in the red.
The saving grace for Uber will be self-driving cars. Uber is a race against time to keep up the VC-subsidies until self driving is feasible. They don't need to make all routes self-driving, only some routes in some cities, to make the unit economics favorable and profitable. This logic holds true even if self-driving requires a large upfront fixed cost investment, as that cost can be amortized over time.
Uber is a money machine right now. For many people all over the world, it's the go-to for taxi services and food deliveries. It would be stupid for them not to invest in self-driving cars. It's something that affects the core of their business and revenue. If Tesla comes out with full autonomy much sooner than they can, Uber is out of business. You can't compete with not having to pay drivers. If another player with self-driving tech starts selling the technology to OEM's, then uber is right where it's at. But if it succeeds before the others, then it's profits and future success will be astronomical. If Uber wasn't working on self-driving tech, it would be a huge mistake.
I'd love to sit in one of those cars and see how well the cars can drive themselves, especially during the winter. It's just a really awesome experience being in a self-driving car - it'd be amazing if you could just hail one with an app.
The acquisition of Otto is interesting. I think Anthony Levandowski is incredible and the trucking industry is perfect for automation given the state of the technology and for logistical reasons. But it seems odd that Uber wants to branch out at this point.
I don't understand how people think self-driving is Uber's solution. Right now drivers are a variable cost. Is Uber going to buy or lease fleets of self-driving cars (that will depreciate and need to be replaced)? That seems like a CapEx heavy business and it's not clear it's a better one from what they have right now, which is only possible because it's a giant labor law hack at scale.
I wouldn't bet on Uber based on self-driving cars. See https://en.wikipedia.org/wiki/Autonomous_car: most auto companies and most big tech companies are working on them, and I wouldn't bet that Uber can beat everyone from Audi to Google to the punch. It's more likely that they'll buy self-driving cars from whoever develops them first -- or that whoever develops them will create an app cheaper to use than Uber. (It's not like Uber would be particularly hard to replicate, at least not if you're Google.)
It's not even clear why self-driving is an important pursuit at this point for a company like Uber. They're going to blow through billions on this and someone else will come in with a solution that just works.
I doubt a scrappy "startup" like Uber can beat companies like Toyota, Volkswagen, GM, Google or even Apple to market with a viable, certified self-driving car. They have, at best, a few billion left to dump into that venture. Those big companies could throw in ten times that if they wanted to.
Self driving cars are just hype that won't be any significant for another decade. You should forget about self driving cars.
What Uber has right now is real, a massive customer base and network of taxi, that is bringing billions of dollars. They could totally focus on that and have a strong and sustainable business.
Uber will be in a great spot if they are thinking about integrating the technology with self-driving cars. That's how the landscape will most likely look in 5-10 years. Uber + Car Sharing + Driverless cars.
The car companies are all perusing self driving technology. It's realistically years and years out. If uber hoovers up the drivers now, there won't be (in wide spread consumer perception) competition in the future because uber will have driven the other competitors out of business.
Uber has massively subsidized users for years, but they don't have the cash to keep doing this for very long or buy a fleet of self driving cars. When self driving cars do take off you can expect a spike of sales as people really want that feature. So, Uber would need to survive ~15 years before any major car companies feel the squeeze and I doubt they can make another 5.
I never understood why people thought self driving cars would lift Uber out of their miseries. Even if they do make it more profitable (although it's not as trivial as you mention), they would also be in a much more competitive landscape compared to the duopoly situation they have now. The costs might go down, but it doesn't mean they would be able to maintain their market share.
What people fail to take into account is the self-driving car future where Uber takes 100% of the profits (since there is no driver). It will start taking a chunk of the people driving themselves market as well when Uber becomes more convenient and cheaper (removing the human allows them to be more competitive with every day driving).
To get to this point however does require it to start operating its own fleet (unless small regional companies form to manage the fleet and just loan out their self driving cars to uber). Either way Uber is in a good position. If it manages its own fleet, it can better negotiate the price of each car than any individual can. It will also have more data than anyone else on how those vehicles operate and can then buy it's own insurance for its entire fleet, cutting costs there. If the alternative occurs, then Uber will own the buy side of the market and have most of the leverage relative to local companies that manage their own fleet.
There are a lot of ways things can pan out, but being the most tech focused of these companies with the best engineers of any of these types of companies, puts it in the best position to own the self-driving car future. The only company better positioned is probably google.
Uber will still be irrelevant even with self driving cars because the automakers will just run their own services without uber. Uber has an app and a user base, that's it.
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