Hacker News Reader

Comment by rcMgD2BwE72F | Hacker News Reader

For now. Imagine that many people give up their personally-owed cars and rely on subscriptions in the next few years.

Sales of cars would drop fast for manufacturers who don't have a on-demand service network with a sufficient critical mass.

Don't forget that giants went close to bankruptcy around 2008 with only a few % of global sales decrease.

Their market cap could drop low enough for Uber/Google/Apple (and their investors) to acquire them on the cheap.

View on HN

Uber has massively subsidized users for years, but they don't have the cash to keep doing this for very long or buy a fleet of self driving cars. When self driving cars do take off you can expect a spike of sales as people really want that feature. So, Uber would need to survive ~15 years before any major car companies feel the squeeze and I doubt they can make another 5.

Subsidizing users is one side of the coin. The other side is that Uber has been living beyond their means and they do not have the cash to keep doing this.

Uber would only need to raise fares 10% and not increase driver payouts to be in the black. The dire predictions don’t seem connected to the balance sheet I’ve looked at. Everybody wags their tongue at uber quarterly “loss” but they pay no attention to the more important measure of free cash flow

Break even does not enable them to pay for massive investments. A 20% increase would cost them significant ridership, but is more or less required to have any significant profit.

They would finance it through debt and equity, do it post IPO etc. There could be a merger instead of an acquisition. Currently if they cut their R&D by a bit and raise prices by 10% their more than healthy enough.

If they only raise prices by 10% it will cost them rides and drivers to Lyft / taxi etc. It's hard to say how much market share this would cost them, but you can't assume their numbers are going to be static with a price increase or they would have already increased prices.

10% is plenty to drive business to Lyft, especially with Lyft’s better brand.

GM has a massive distribution, storage, and service network that Uber will have to replace if they are going to stop relying on drivers buying, storing, and maintaining their personal cars.

This absolutely will be a big shift for the existing manufacturers, likely resulting in major cuts in manufacturing employment.

The question is: are they taking steps to be prepared for the change, or will the change catch them off guard?

It seems like GM is preparing itself, at least on the tech side. Is it taking similar measures to bolster and prepare its balance sheet? That’s unclear to me. But that’s what I’d be looking for.

I don’t disagree with your comment, but wish to add one important note:

Once cars are pure electric (not hybrid), then that maintenance network becomes fairly worthless.

I think Tesla has shown how little maintenance an electric car needs, and how much smaller the related infrastructure becomes.

Any car still has suspension, brakes, electronics, body, tires and all the small gimmicks .. And autonomous cars will bring on even more sensors and electronics. Existing maintenance network already deals with sensors and electronics.

No no no you see the way this works is let's say the car you are in gets a chip in the windshield from a rock... It will immediately dial home for a solution which will most likely be to drive itself off a bridge to get a total replacement, and forge the records by generating a video of a non-driverless car swerving into it, with a database of license plates of known driver based cars..

If GM manages to build self-driving cars before Uber, why wouldn't they just acquire a third tier Uber competitor (someone small enough that they don't have to pay for tons of existing users, but big enough to have made a reasonably functional app), kick out the human drivers replacing them entirely with self-driving cars, then undercut Uber's prices driving Uber out of business?

It would be much, much easier to get close enough to Uber's app functionality to compete with them than to get close enough to a self-driving car to be able to use them for millions of riders.

That is partially happening already. Even Porsche is offering a subscription. [1]

[1] https://techcrunch.com/2017/10/10/porsche-launches-on-demand...

I don't think this will ever be worth it for users that need a reliable ride at any time (e.g. families). These new subscription services are great if you want to drive a new car all the time and experience different models. But if you want to use the car whenever you want with no hassle and without cleaning it after/before every use, ownership (or leasing) is still the way to go.

The part about bankruptcy over a small dip is actually really interesting.

That probably means that a pretty small lead in this area could be very significant in terms of how this actually plays out.

Weren’t there other issues? Pension debt and union issues were hurting those companies for years, the slowdown just nudged them over and then a lot of that stuff got restructured.

There are a ton of variables, not having a self driving play seems like a concern for an auto company, other than that it seems like it could play a lot of ways and there is still this giant culture thing where cars symbolize so much

Uber is an app and some fast talking bros (to put it a bit loosely and little harshly).

GM actually builds things. There is a huge difference.

Point being, it's probably going to be easier to to build the app and the rental network than to start building self driving cars.

Great point.

I’d love to see GM create their own app, and offers drivers who use their app discounted pricing or financing on their cars.

Could create a whole new world of competition for Uber.

If GM is really only 2-3 years away from having a fully automated taxi service, I don't see the strategic value in making such a move.

A whole bunch of time and money sunk into launching a rideshare service and recruiting drivers, only to almost immediately transmute the entire thing into a giant PR disaster full of news stories to the effect of, "A year ago I mortgaged my house to buy a car and drive for GM, and already they've kicked me to the curb."

I’m presuming that it’s longer than 2-3 years to truly get full automated driving.

2020 is still the goal for geofenced city taxi autonomy for Uber and Cruise.

It may be, but I don’t buy it. Of course, I’ve been wrong before.

I don't buy it, either. But my original comment was speculating about GM's perspective, not mine.

German manufacturers already own uber rivals. The reason not more car companies have them is because it doesn't make sense financially and there's no lock-in. You can get an app up and running within a few months and users will be happy to switch if it's cheaper and/or more convenient.

Reply on news.ycombinator.com