Will Uber Be the Biggest Winner in the Robotaxi Era?
After $Tesla Motors(TSLA)$ ’s Robotaxi event, its stock plunged, while $Uber(UBER)$ ’s surged by 10%, hitting an all-time high. But how did Musk’s announcement turn into good news for Uber?
Uber's Strategic Position
Uber is a global platform for ride-hailing, food delivery, and freight transport. Its network effects and potential cost savings through autonomous vehicles (AVs) put it in a strong position to seize the opportunities presented by Robotaxis.
With 150 million users on its platform, Uber provides immense value to companies developing AVs. Autonomous cars are expensive, costing $150,000 to $200,000, including both manufacturing and the high-tech sensors and computing power required for self-driving.
To make these vehicles profitable, companies must optimize uptime and minimize idle mileage, requiring access to a large pool of service-ready users—something that is challenging to establish from scratch.
Uber's Pure Marketplace Strategy
Uber’s strategy is to focus on being a marketplace, not a manufacturer. Initially, Uber tried to build its own AVs, but it soon became clear that this wasn’t sustainable. Instead, Uber now relies on scale and network effects, creating demand while leaving the heavy lifting to AV producers. As a result, AV makers like Waymo and Cruise increasingly depend on Uber’s platform for access to riders.
Uber has already struck deals with Waymo (Alphabet) and Cruise (GM). Tesla, on the other hand, aims to create a fully integrated network, advocating a vertical integration model. Similar to the PC and smartphone industries, both models can coexist—one focused on vertical integration, the other on open platforms.
Two Future Scenarios for Robotaxis
1. Uber Buys and Operates Robotaxis Internally
This approach would require Uber to pay upfront for Robotaxis and take on the risks of idle mileage. However, given that Uber can continue to use human drivers (who bear the operational risks), this model seems unlikely and runs counter to its marketplace strategy.
2. Uber Leases Robotaxis from Manufacturers
In this more likely scenario, manufacturers such as Tesla or Waymo would own and operate the vehicles, while Uber pays only for the time the vehicles are in use. This shifts the financial risks to the manufacturers. For Uber to adopt this model, the operating costs of Robotaxis must be lower than those of human drivers, or there would be no reason to switch. Competition among AV makers is expected to drive these costs down.
Conclusion
Uber’s success lies in staying true to its marketplace model while capitalizing on its large user base. It avoids the burdens of manufacturing and shifts the risks to AV producers.
As long as Uber's costs with Robotaxis are competitive, it stands to benefit significantly from the transition to autonomous vehicles, potentially emerging as the biggest winner in the Robotaxi era.
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