- The future of Uber’s business is riding on self-driving cars.
- The transportation startup has warned that if its rivals develop the tech at scale before it does, everything from its ride-hailing to its food delivery efforts are at risk.
- On Thursday, the company finally filed to go public in what is expected to be one of the biggest IPOs of all time.
- Uber’s financial disclosures provide an unprecedented look at the inner workings of the firm, and how it’s thinking about its future.
- Visit BusinessInsider.com for more stories.
Uber is convinced that self-driving cars are the future of its business. But even so, it warns investors, they could be a total bust for the company.
On Thursday, Uber finally filed its S-1 paperwork to go public in the coming weeks, offering an unprecedented look at the inner workings of the ride-hailing company. It also provides fresh insight into how the Silicon Valley mega-startup views the promise – and perils – of autonomous vehicles.
“We believe that autonomous vehicle technologies will enable a product that competes with the cost of personal vehicle ownership and usage, and represents the future of transportation,” Uber’s paperwork says, adding that it believes believes the tech “will be an important part of our platform over the long term.”
In 2018, the company spent $US457 million on its autonomous vehicle-focused Advanced Technologies Group (ATG) and other tech initiatives – including Uber Elevate, its futuristic urban aircraft program. Long term, Uber hopes the self-driving car tech will allow it to end its dependence on human drivers in favour of a fleet of cheaper autonomous vehicles that don’t need to be paid wages.
But despite investing hundreds of millions of dollars in self-driving car technology, Uber still warns that it might screw up – and says it expects its competitors to be able to commercial ise the tech “at scale” before it can.
“We have invested, and we expect to continue to invest, substantial amounts in autonomous vehicle technologies. As discussed elsewhere in this prospectus, we believe that autonomous vehicle technologies may have the ability to meaningfully impact the industries in which we compete,” the company wrote.
“While we believe that autonomous vehicles present substantial opportunities, the development of such technology is expensive and time-consuming and may not be successful. Several other companies … are also developing autonomous vehicle technologies, either alone or through collaborations with car manufacturers, and we expect that they will use such technology to further compete with us in the personal mobility, meal delivery, or logistics industries. We expect certain competitors to commercialize autonomous vehicle technologies at scale before we do.”
Uber calls out Google cousin company Waymo, Cruise Automation, Tesla, Apple, Zoox, Aptiv, May Mobility, Pronto.ai, Aurora, and Nuro as the companies all racing to conquer the self-driving mobility market – citing Waymo as a particular threat due to the development of its commercialized fleet.
If these rivals do manage to scale up self-driving tech before Uber does, then numerous areas of its business could be at risk.
“In the event that our competitors bring autonomous vehicles to market before we do, or their technology is or is perceived to be superior to ours, they may be able to leverage such technology to compete more effectively with us, which would adversely impact our financial performance and our prospects,” it wrote.
“For example, use of autonomous vehicles could substantially reduce the cost of providing ridesharing, meal delivery, or logistics services, which could allow competitors to offer such services at a substantially lower price as compared to the price available to consumers on our platform. If a significant number of consumers choose to use our competitors’ offerings over ours, our financial performance and prospects would be adversely impacted.”
Similarly, even sourcing parts and securing suppliers could prove problematic in the experimental field, it warns – especially in the event of external events like currency market fluctuations, new tariffs or trade wars, or theft.
And all this high-tech development is capital intensive: There’s no guarantee that Uber will be “to obtain adequate financing or financing on terms satisfactory to us when required, [in which case] our ability to continue to support our business growth and to respond to business challenges and competition may be significantly limited.”
Uber doesn’t anticipate eliminating all traditional human drivers overnight once the tech reaches maturity. Instead, the company predicts a “hybrid” period, “in which autonomous vehicles will be deployed gradually against specific use cases while Drivers continue to serve most consumer demand … Such situations may include trips along a standard, well-mapped route in a predictable environment in good weather.”
This prompts another, related risk: The pursuit of autonomous technology might spark discontent among Uber’s existing base of human drivers, with unpredictable consequences. The efforts may “add to Driver dissatisfaction over time, as it may reduce the need for Drivers,” the S-1 warns.
“Driver dissatisfaction has in the past resulted in protests by Drivers, most recently in India, the United Kingdom, and the United States. Such protests have resulted, and any future protests may result, in interruptions to our business. Continued Driver dissatisfaction may also result in a decline in our number of platform users, which would reduce our network liquidity, and which in turn may cause a further decline in platform usage.”
The disclosures echo earlier remarks by former CEO Travis Kalanick, who described the technology as an “existential” risk to the company.
“It starts with understanding that the world is going to go self-driving and autonomous,” he told Business Insider in 2016. “So if that’s happening, what would happen if we weren’t a part of that future? If we weren’t part of the autonomy thing? Then the future passes us by basically, in a very expeditious and efficient way.”
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