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Comment by yalogin | Hacker News Reader

This is a great article. The biggest point here is unlike facebook, google and Amazon there is no chance to magically find billions of new users and scale up for Uber. So the chance of turning a profit can only happen with driverless cars, which is atleast a few years away. I did not realize they are desperate to get self driving cars. Wonder how long they can sustain if their self driving car project hits a snag.

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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.

Right, "driverless cars" are still at least 10 years away, probably 20.

> Self-driving trucks are a much easier technical problem

People keep saying this. Wouldn't you still have to solve the hard problems? A truck that spends 99% of it's time on interstates still have to deal with that 1%.

And I'm not even sure about the 99% number. I've been told that trains tend to be used for most longer distance shipping so a lot of trucking is relatively short distances. There are also a lot of reasons I can imagine for keeping a human in trucks even if the trucks could mostly drive themselves between depots.

What if you bunched up multiple rides? Like a leader truck which has a human operator and multiple driver-less follower trucks that simply follow the leader.

Going to need drivers for each of those trucks after you exit the interstate.

You buy a bunch of truck stops, and use human drivers for the local portion. The truck stops become analogous to ship ports. The vast majority of the miles are then automated.

The problem with self-driving cars is that, while they help Uber's cost situation, they eliminate Uber's barrier to entry.

Right now, I can't create Newber because it would be hard to convince drivers and users to switch. You need good driver availability at all hours of the day and night and drivers won't want to be on your service earning nothing if you don't yet have users. Many companies like Sidecar went bust hoping to hit a critical mass and overcome that barrier to entry. With self-driving cars, it's easy for me to pay, say, $400/mo/vehicle and blanket a city even before there are users. It isn't cheap, but it also isn't so expensive. 100 vehicles would only be $40,000/mo. That's certainly not such high start-up costs for anything with a bit of funding. Plus, the economics work out nicely. $400/mo comes out to $13/day. Let's say you only charge $3.25 per ride. You'd only need to do 4 rides per day to justify that $400/mo - and 4 rides per 24-hour period is extremely low. Even when you start thinking about costs beyond the fixed price of the car (fuel, maintenance), it's still pretty good. You're going to get at least 4 rides per gallon in a reasonably fuel-efficient car. Make them Prius vehicles and get 10 5-mile rides on a $2-3 gallon. Tires cost money, but if the average ride is 5 miles you'll get around 10k rides for a set of tires adding $0.20 per ride?

Point being, the only reason Uber doesn't have a lot of competition today is that it's very hard to overcome the network effect. Once self-driving cars come into the picture, it will be easy to create many Uber competitors that can overcome the network effect by blanketing a city quickly and easily and scale quite reasonably by ordering new self-driving vehicles as demand increases. That will put a lot of downward pressure on pricing. I think Uber has found that if they're more expensive than competitors like Lyft and Fasten, riders will switch. Self-driving cars will make that pressure only more intense.

At some point, Uber is likely to face competition from car manufacturers themselves. If you're GM, you can see the writing on the wall that car buying might be going away. But you could always offer people a car subscription. GM would certainly have a cost advantage on the vehicles compared to Uber. Likewise, they might face competition from logistics companies like FedEx or Amazon. Why not create vans that can be fitted with seats for the morning commute and create ad-hoc bus routes as users request them (think of Uber Pool on steroids or a bus route that conveniently goes from your house to your work on your schedule). During the passenger lull during the working day, put packages in them and have a quad-copter or robot move them from van to stoop.

The thing is that self-driving vehicles just looks like a lot of competition for Uber. Yes, it will mean lower costs, but I don't see how they'll fend off a legion of new competitors where they have no barrier to entry with any good margins. The only thing Uber could do is keep margins so low that they won't make a profit. But that's no good for them. If they ever try to raise the margins, others will swoop in. Plus, if Amazon has shown us anything, it's that a lot of competition will stick around even if your margins are tiny.

I think there's a big market that will come from self-driving vehicles. Car ownership might not last. Deliveries might be automated. Traditional public transit might be replaced by ad-hoc routes with 15-passenger vans. But it's hard to see Uber lacking competition here. Self-driving vehicles will simply make it too easy to compete and leave Uber without its traditional barrier to entry.

Since the self-driving vehicle topic has been discussed here at length, I'm making the blanket assumption that is just the way it is going to work in the future: open your phone, call a car, ride it to your destination.

I think it is a big assumption anyone will be able to buy a bunch of self-driving vehicles and blanket a city. Tesla has already prohibited auto-pilot (or whatever it ends up being called) from being used for third party ride sharing services. I would suspect other manufacturers will too barring exclusive contracts with the transport/ride-sharing/etc company.

This means right now it is an arms race between Tesla and Uber to manufacture, at scale, the first fully self-driving "taxi." Tesla is probably well ahead on that game and Uber will either need to partner or buy an existing car company.

The secondary problem is the platform is the mobile phone. Apple or Google could easily build an auction platform in to the OS for calling vehicles. In that case, it could become a commodity business with royalties paid to whoever has the dominate mobile device in the future (could be Facebook or Snapchat instead.)

Thirdly there may be vehicle differentiation. Right now if you use UberX, there is a pretty wide range of vehicles that could show up. If brand preference and car features matter a lot, I don't see why a luxury car maker like BMW couldn't at least a niche player.

Finally, everyone has different ideas. What this looks like in 12 months is going to be different that 36 month, vs 10 years from now. I think some people are right about their assumptions of what will happen, but maybe it will only be that way for a few years before completely changing again. How it plays out probably has more to do with what decisions and deals the big players make -- Uber, Tesla, Google, Apple, the other car companies -- more than any particular inevitability.

One other thing is that in many cases there's no particular reason the journey has to be completed end-to-end in a self-driving car. For longer journeys it might make sense to take public transport for the majority of the route, and just use taxis for last-mile at either end. This might even be preferable for taxi companies, since they probably make more money on many short trips, and they don't waste time driving empty cars to/from remote areas.

This could work really well if Google integrated payment alongside their directions, so when you search for directions, you get a total price, and a button to pay for that journey immediately.

> Tesla is probably well ahead on that game and Uber will either need to partner or buy an existing car company.

Tesla may have been working on it longer commercially, but Uber did poach a lot of expertise from Carnegie Mellon to get a head start:

http://www.businessinsider.com/uber-poached-a-load-of-staff-...

If Tesla is ahead, it's not by much. Uber is already demonstrating (alpha-testing?) self-driving cars in Pittsburgh.

https://techcrunch.com/2016/09/14/1386711/

I'm not sure why Uber needs to be directly working with a car company, other than for better integration of the self-driving technology with the vehicle systems. However, they are currently working with Volvo:

https://www.media.volvocars.com/global/en-gb/media/pressrele...

I believe this is why uber is pushing so hard to be global. They are the only large ride share company to expand widely beyond the US, and I think that's explicitly so they become the global name of pick up services. Being in that position will give them leverage with the obviously fickle users, even if only a little, and they will be able to position themselves as a platform for all those potential competitors you mention.

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