To The Moon

After $Tesla Motors(TSLA)$ ’s “We, Robot” event, Uber's stock surged nearly 11%, while Tesla’s dropped almost 9%. This shift seems to be a clear vote from investors on which company is currently leading in the autonomous driving space: $Uber(UBER)$ is ahead, while Tesla is falling behind.

Collaboration + Integration: The Winning Formula?

Tesla has long been at the forefront of pushing autonomous driving as the future. Since 2016, it has boldly claimed imminent breakthroughs in this technology. However, it still seems years away from bringing it to the mass market.

This slow progress from Tesla has opened the door for Uber to solidify its position as a leader in the mobility space. Interestingly, Uber might come out as the winner of the autonomous driving revolution without bearing the burden of developing the technology itself, unlike Tesla.

Uber’s strategy for commercializing autonomous vehicles focuses on partnerships and integration rather than in-house development. This allows Uber to capitalize on advances in self-driving technology while concentrating on its core service—seamlessly integrating autonomous vehicles into its existing network to boost efficiency and reduce operating costs over time.

As of 2024, Uber has announced partnerships with major players like $Alphabet(GOOG)$ $Alphabet(GOOGL)$ Waymo, Avride, and $General Motors(GM)$ Cruise, bringing autonomous tech into its platform.

These collaborations not only enhance Uber’s technical capabilities but also spread out the financial risks and development costs associated with autonomous driving. For instance, Waymo has already rolled out self-driving cars in some cities, and Uber plans to expand this on a larger scale by 2025.

Uber continues to post positive earnings and maintains a healthy cash flow. By 2027, its free cash flow is expected to reach $11 billion. According to Refinitiv analysts, the company is on track to generate nearly $11 billion in free cash flow by 2027 without compromising its growth momentum.

Has Uber Secured Its Lead?

The stark contrast in stock performance after Tesla’s “We, Robot” event highlights investor sentiment around the progress and feasibility of autonomous driving. Tesla’s nearly 9% drop suggests disappointment in the company’s lack of significant advancements in self-driving technology, raising doubts about whether Tesla can fulfill its bold promises in the near future.

On the other hand, Uber’s 11% surge reflects growing investor confidence in its current business model, especially as autonomous driving progresses slower than expected. Tesla’s stalling progress signals that the disruption of ride-hailing services by autonomous vehicles isn’t as imminent as once feared. This gives Uber the advantage of continuing to leverage its thriving business without the immediate need to transform or directly compete with self-driving tech.

In essence, Uber’s partnerships, steady financial growth, and established ride-hailing platform position it well for the future, even if autonomous vehicles take longer to become mainstream. Meanwhile, Tesla’s ambitious goals for autonomous driving face increasing scrutiny.