Uber CEO Says He’d Buy 500k Self-Driving Cars From Tesla Motors
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Now Uber is saddled with a huge inventory of aging vehicles needing maintenance and all the other associated costs that come with that (repaid centers, staff, etc.).
A new company "Hypercar" or something is formed that let's people "ride-share" their own personal self-driving Teslas...making maintenance and upkeep the car owner's responsibility. Hypercar splits fairs with the owners.
Keeping in mind that Hypercar would have to pay car-loaners at least the amount that the car loan is costing them in maintenance & depreciation (or else who would loan their car), Uber would come out ahead.
Maybe in the short-term, this Hypercar company could rely on car-loaners to underestimate maintenance/depreciation costs but surely that would only last so long.
Also, I might need a self-driving car to do a 60 mile trip to work and home every day. But, during work I may be better off letting the car drive others than pay for parking.
if "Uber should be able to maintain their own cars at a lower cost than individual car owners can", then Uber should be buying cars today and leasing them out to their contractor drivers. Truck fleets do this, pretty much, so it's not a completely crazy idea. Uber isn't doing that, which suggests that Uber thinks its a better deal for them to have their drivers shoulder the ownership, maintenance and depreciation costs of the capital. Why does self-driving change this?
Only reasons that seems to make sense is because people think that Uber is only compensating their drivers for their labor - but they're not; they are compensating them for their labor as a driver plus the lease and use of their car.
Uber got where they are - managing a massive fleet of vehicles - not by purchasing cars, but by getting other people to purchase cars on the assumption that uber would help them turn that investment into an income stream. Self driving cars raise the prospect of me being able to turn my car into an income stream without me even having to go out and drive it.
If uber do it right, people will buy fleets of self-driving teslas just so they can rent them out via uber, and uber won't have to invest a penny in depreciating vehicle hardware.
Uber does not manage a massive fleet of vehicles. They don't have to service these cars, pay insurance on them, fill them up etc. They are just middle man that links people with cars with people without them.
The clever part is that, yes, they don't own them. That was my point. Like, my entire point.
"Tesla Motors now has a huge incentive to get the RoboCar on the road by 2020, but Mr. Musk will need to get the laws rewritten in order to make that happen."
Sorry, I laughed so hard at this line. Before, he was working really hard to get them on the road, but now that Uber is "willing" (again, not even a quote, just a summary of something Jurvetson said that Kalanick said) to buy a decent number that they can't even afford EVERYTHING HAS CHANGED!
Removing the driver won't be the last innovation these companies do.
EDIT: now to mention the unavoidable legal issues, which to a certain extent are similar to what Uber is already dealing with and "resolving" quickly according to reports.
If Google dumped billions into a self driving cab fleet and offered me 30% lower prices than Uber, would I switch? Yes, probably. Do I gain any benefit from my friends being on Uber? No.
For example, what if Uber "builds" (finances and badges) their own car, and you really like it (no reason it can't still have a steering wheel). What if they are willing to enter a one year agreement where it is cleaned and parked in your driveway at 4AM every Mon-Fri morning to take you to work when you're ready. Or if they have a parking lot near your office with 100 cars where you can just walk up to any car, open the door, and go. Or if they have an automated electric vehicle charging network over the whole country. It will take a while to discover what really matters for a AI-car network.
Source: Crystal Ball
Utter rubbish.
No, you don't. You see cars which have a hands-free driving mode. Every single one of them still absolutely requires a driver.
I've been closely involved in automated transport for years, and the current hype cycle is getting exhausting. There are several orders of magnitude of difficulty between a car which allows drivers to take their hands off the wheel some of the time (or even most of the time), and a car which does not require a driver. We are many years, and possibly decades, away from the latter.
http://techcrunch.com/2015/06/25/googles-latest-self-driving...
We are certainly still in the "Every single one of them still absolutely requires a driver." phase. Given that you've been in the automated transport field for years, and I haven't, I won't make any comments about the many years/decades timeline, except to say that, in general, the pace of technological growth in many areas has surprised me.
Not all environments are as friendly. Downtown San Francisco will be extremely hard to get right -- note that I say get right, not dump a robot car there and hope for the best. There are going to be a lot of crushed pedestrians and damaged parked cars, and I'm not sure the people who live there will value having autonomous vehicles enough to overlook that series of incidents. Then there are suburban and rural environments with their own challenges: poor mapping, roads that aren't obviously roads, one-lane roads, poor visibility, lack of signage, and so on. Not every location has weather like the Valley, either; suppose an autonomous car gets stuck in snow. A human driver can usually get out, possibly with the aid of a shovel, carpet, sand, etc. The robot can't do those things, and the passengers may not be able to (for example, it's unlikely that a robotic taxicab would have any provision for passengers to control it).
The world is a much bigger place than the Valley, and comes with much bigger challenges. That's why I don't see any real likelihood that fully autonomous vehicles will be developed any time soon. It's easy to get lost in narrow thinking when your entire world consists of a single place and a bunch of people all living in that same place practicing groupthink. This problem is much more difficult than you imagine.
I'm pretty sure I've seen self-driving cars on Highway 1 in California, for example, which has construction, cattle gratings, one-lane segments, a lot of twists and turns, pull-offs, and places where it gets very narrow and you have to pull off and let opposing traffic pass. They had safety drivers, but I think this means that Google's at least considering these driving conditions in their software.
We'll see.
Unless you have Uber's cap table in front of you, you cannot figure its valuation. The journalist certainly did not (and I don't either). The most we can say is that $50b is a ceiling on the company's valuation; in reality it is far less.
Many, many articles have been posted here explaining this in greater detail. Please read them.
I doubt Uber's original goal was to outright own (with all the hassle & overhead thereof) a half-million vehicles.
The idea that Uber would thrive in going from "Hey, dude, sign up and you'll be on the road," to "First we're going to place an order for a $40,000 capital investment that is all risk to us if it doesn't pay out" is completely insane.
Not to mention that they will have literally no differentiating feature from any competitor who is interested in making the same investment, so they have no way to support any kind of large profit margin.
And all this assumes that people won't just want to own their own driverless car, which is far from certain.
Uber has to say that driverless cars will be wonderful for them, because large amounts of the people who might want to invest in Uber are also convinced that driverless cars will be here in three years.
So the craziest part of a self-driving, autonomous, on-demand taxi service is that someone had to buy a bunch of cars?
So in the event of driverless cars, Uber will have to slash prices -- and, unfortunately for them, a self driving car does not in fact claw back all of their driver's revenue.
Now, there are plausible scenarios (though it's by no means guaranteed) in which driverless cars vastly increase the size of the rides-for-hire market, so even if Uber has to take their current margin on lower-cost rides and pay for inventory, you could imagine that working out overall well for them.
But if it's such a great business to be in, why won't they face competition? There are plenty of companies that are deeper-pocketed than Uber. There are in fact plenty of companies with stronger brands than Uber. And the geographical opportunity to compete locally is pretty brutal.
What's Uber going to compete on?
Size of inventory? That drives up costs (when we're already stipulating that they are paying billions in new costs).
Price? That drives down revenue (when we're already stipulating that they're slashing prices).
Cleanliness, as various people have suggested? That means they have to get into a whole new hyper-local physical business with its own logistical problems, and why should we imagine that Uber can build the best car-cleaning business of its field? What about Uber makes us believe they're the best at that? Is this even a field that can be usefully competed on? Are people willing to pay top dollar for a really really really clean car, or does everyone bring together a basic cleaning service and, whatever, it's all good to the passengers?
If you don't think Fedex and UPS have logistics and fleet management down to a science, I highly recommend you research their capabilities.
AFAIK, Uber's MO was to organize a massive "bring your own taxi" contracting service.
1. Google isn't going to be a player in personal mobility. Their technology is no more up to the task than Tesla's or anyone else's. Expect to see a few incremental improvements from all major automobile manufacturers in open-road autonomy, but nothing that's going to enable a driverless taxicab or anything like it.
2. Webvan isn't a good comparison for Uber, except in that it's dead. The actual concept behind Webvan was a good one and is now offered by many, many companies. Had it not been founded when it was, it's likely it could have raised a few more rounds, learned the lessons it needed to, and become profitable. There's nothing about Uber that's novel or interesting; from the end user's perspective, it's no different from Flywheel, which is nothing but the pre-Internet telephone-dispatched taxicab company with a new communication frontend. The only thing Uber has going for it is a structure that tries (and is now failing) to bypass regulation. Without that, it's just another taxi service.
But I'm not interested in the high Tesla price. I would be interested perhaps in a used Tesla. I've never bought a used regular car before, because regular cars can require a lot of maintenance when they get old and I don't want to deal with the hassle and the unpredictable expenses. Electrics are simpler, though, so I think a used electric might be OK.
I'm sure there are plenty of people like me.
So here's my suggestion to Tesla (and other car companies that might make self-driving cars). Make a ton of self-driving cars. Run your own Uber-like service with them (but be legal, and feel free to put Uber out of business as a side effect).
Besides providing taxi service, these cars will serve as roving showrooms for your cars. Many people will ride them as taxis, and then consider buying one when they buy a new car.
When a given car has been used for a few years for the taxi service, retire it, tune it up, and offer it for sale used to get people like me as customers.
Heck, put a "buy it now" button in your taxis that lets a passenger buy that particular car. It would then take them to their destination, return to your service center, get its sale tune up, and then the next time the buyer calls for one of your taxis you would send his car to him, and it would stay with him after that.
Of course, we are talking about self-driving cars here so I'll just shut up. :D
Take out the driver, and anyone could offer their car as a cab. The app to do so could be Uber, but it the bar is lowered considerably if it's purely a way to book a car.
And I thought Uber was pretty weak compared to YellowCab on driver vetting?
You'd put it in a marketplace with an app for people to order the rides...:P
The two things that are a knock on Uber today are the politics around taxi licenses and the politics around compensating their drivers. I can see why Uber would be happy to eliminate one of those problems.
And here's the source quote:
"Jurvetson said Uber CEO Travis Kalanick told him that if Tesla cars are autonomous by 2020, Kalanick wants to buy all 500,000 that are expected to be produced."
Fully driverless cars are still not going to be a good thing for Uber.
I guess I just don't see there's much of a barrier to entry now, so autonomous cars aren't much of a negative.
1. Uber currently has the ability to grow and move at software speed. Other people buy the cars that it uses and assume the risk. If it needs to pull out of a city because of hostile regulation or whatever, its drivers are left holding the bag. Going from that to being a company with an expensive and gigantic physical inventory would be incredibly painful for it.
2. Driverless cars are the end-point of the commoditization of the rides-for-hire market. If you're buying a Tesla that drives itself, anyone else who provides the same Tesla provides exactly the same level of service to your customer. You can only compete on price or availability -- but availability now means buying expensive physical inventory, so both means of competing are now super, super expensive for Uber.
3. All of this assumes that it even makes sense to have a rides-for-hire business in a driverless car world. It's possible it will, but we don't know that! If the sensor package of driverless cars is relatively cheap and relatively durable in value, then probably driverless cars will actually drive business away from rides-for-hire and towards car ownership.
1. The recent California ruling might minimize this. If drivers are employees, it's not nearly as easy to leave them holding the bag. The physical inventory of cars is also a competitive advantage. If you want ride that's great, because I happen to have 5 cars in your neighborhood right now...
2. That's no different then the current position. I can use Uber, Lyft, a taxi or buy a car myself. And like now, the competition is on who has a car close to me and who has the cleanest car. I could personally compete with Uber by have one well maintained clean car with a mint on the dash, but I could only afford one.
3. Sorry, but I think you're arguing against #1 here. Uber having a large fleet of cars with the logistics to handle them would kill my small business's desire to own cars. The goal with driverless cars is to keep utilization as high as possible; if Uber can keep their cars at 95% utilized they will probably be cheaper than my car which is about 5% utilized.
Your point 1 is "Maybe Uber is going to get a huge kick in the teeth right now, so then the later kick in the teeth will... pale in comparison?" But actually they aren't terribly related. You get why startups exist in the computer sector and not in the traditional manufacturing sector? It's because growth is so much easier in the computer sector. The marginal cost to add a customer in software is tiny. The marginal cost to add a customer in a business with physical inventory is much higher. Going from software to physical business is not to be desired.
Your point 2 is yet more awful for Uber: Great, they get to compete on cleanest car? So now in addition to having to buy these very expensive depreciating assets, they also have to add local employees everywhere to actually clean them? Wasn't the advantage here going to be that they took the cost of "paying people" out of the equation? Uber's growth is going to be based on their ability to build out a really competitive cleaning service? Does that sound like a business you want to invest in?
Point 3 is interesting:
So, look, people who were already of the opinion that there's too much car ownership have gotten excited about the potential of driverless cars to increase car utilization. But "increasing car utilization" isn't a goal of normal people. "Saving money and/or receiving more value" is the goal.
A heavily utilized Uber car is cheaper on some margins than a lightly utilized personal car (that is, it's cheaper based on time-based depreciation and on parking fees). It's more expensive on other margins (it drives more miles per passenger served than the personal car, so its fuel costs, maintenance costs, insurance costs, and milage-based depreciation are higher). And of course Uber has to make a profit, so that's an additional cost as well.
How does that all play out? You can add up the hypothetical costs fifteen different ways based on different assumptions, and come up with whatever numbers suit you. The truth is that nobody knows how the cost of ownership of driverless cars is going to break down yet.
But I will tell you one thing: No car, Uber or otherwise, is going to be 95% utilized.