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Ride-hailing titan Uber is close to accepting a $1 billion investment for its autonomous vehicle (AV) project from Japanese telecom Softbank and Toyota, according to Venture Beat.
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The investment will reportedly be finalized within the next month. Both companies are already Uber investors: Softbank has been Uber’s largest shareholder since last year, and Toyota invested $500 million in Uber last year and agreed to co-develop certain self-driving technologies with the company.
The news of the significant capital injection indicates that Uber is intent on developing its own self-driving tech as opposed to bringing third-party AVs into its fleet. Some of Uber’s investors have urged it to sell off its AV unit, which loses between $125 and $200 million a quarter and is responsible for 15-30% of Uber’s quarterly losses.
But the company remains committed both to building software and hardware to enable cars to drive themselves and to managing a fleet of its own AVs. Uber likely hopes to offset some of its losses moving forward with the additional investment from Uber and Softbank. An alternative would be for Uber to simply operate a fleet of AVs manufactured by third parties in its ride-hailing network. There are three likely reasons Uber decided against that approach:
- Greater control over the customer experience. By designing and operating its own fleet of AVs, Uber will maintain complete control over the customer experience. The fleet manager approach would require Uber to turn over at least some portions of the customer experience to partners. For example, the vehicles may have been co-branded by Uber and its partners.
- Maximizing ride-hailing revenue potential. Uber would have had to share revenue with its partners in a third-party fleet management model. But by owning the tech stack and operating a fleet of AVs, it’ll be able to keep all the revenue earned from AV ride-hailing.
- Monetizing the tech potential beyond the auto industry. Though self-driving technologies are pricey to develop, they could fetch a pretty penny once refined, both in and out of the auto industry. Waymo, notably, began selling its LiDAR sensor technologies to non-auto industry customers earlier this month, an opportunity Uber may also have its eye on.
But Uber’s commitment to developing AV tech likely means that rival Lyft will beat it to market with a commercial AV ride-hailing service. Lyft has taken a different approach to AVs — any AV company can provide rides through Lyft’s open self-driving platform.
The ride-hailing firm simply handles fleet operations and management, keeping a cut of the revenue earned from rides. This approach cedes some of the customer experience to AV manufacturers, yet is far less time-, labor-, and capital-intensive than Uber’s approach. For Lyft, this means it’ll likely deploy an AV ahead of its chief rival, especially given the power of some of its partners and investors — GM, which is considered to be second only to Waymo in the AV race, is a major Lyft investor.
Ultimately, Uber seems willing to risk ceding an early-mover advantage to Lyft in the multi-billion dollar AV market, where it has already experienced a number of setbacks. On top of its massive monetary losses, Uber pulled all its test AVs from the roads for nearly a year after a crash that killed a pedestrian in Arizona last year, a significant testing setback.
And when Uber was preparing to restart AV tests, it discovered that its cars’ self-driving systems reacted slower than a human operator to obstacles on a track, according to The New York Times. Taken together, Uber — which has said it would deploy AVs in its ride-hailing network in 2019 — now appears a step behind AV leaders like GM and Waymo.
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See Also:
- XPO Logistics is expanding its digital platform to Europe
- Gold teeth, snakeskin heels and a fish tank: These are the weirdest things lost in Ubers last year
- Waymo is selling its sensors — but not to autos
Source: Business Insider – nshields@businessinsider.com (Nicholas Shields)