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Maybe I'm missing something but that number sounds hard to believe. An S-Class in the US is $100K. Even if a stripped down "utility" version was available at $5
by mmakunas 11y ago
Maybe I'm missing something but that number sounds hard to believe. An S-Class in the US is $100K. Even if a stripped down "utility" version was available at $50K that's $5B worth of cars. Yes, it's a "long term" order (i.e., not paid for and delivered at once), but that seems way beyond anything even Uber would do.
- nodesocket 11y agoAgree. Even if Uber got them at 1/2 price, let's say $60,000, the math doesn't add up. Assuming they don't do some fancy accounting and tax magic.
- pbreit 11y agoOr something completely boring like leasing them.
- WalterSear 11y agoOver ten years, that's $6k a year.
- gk1 11y agoI'm sure there's a volume discount when you order 100,000 of anything, even an S-Class. There's also the possibility of this not entirely being a cash sale. That is, if the report is even true.
- hazelnut 11y agoThink so too. Most likely Daimler will get a stake in Uber - which makes sense for both sides.
- fit2rule 11y agoUber is what you need to make an auto-driving automobile acceptable to the general public. With Uber spin, Daimler can push on the driver-less car in many markets.. Sci-fi days ahead methinks.
- toomuchtodo 11y agoTesla seems to be doing a fine job showing the benefits and safety of autonomous vehicles to the general public and regulators.
- josephmx 11y agoWhich Tesla vehicle is self driving?
- toomuchtodo 11y agoBoth the Tesla Model S and X are Autonomous Level 3 capable: "The driver can fully cede control of all safety-critical functions in certain conditions. The car senses when conditions require the driver to retake control and provides a "sufficiently comfortable transition time" for the driver to do so." https://en.wikipedia.org/wiki/Autonomous_car#Classification https://en.wikipedia.org/wiki/Autonomous_car#Classification Its expected their Model 3 mass market vehicle will contain the same, if not a greater level, of driving automation. Disclaimer: I've traveled down the interstate in a friend's Model S for ~2-3 hours at a time at ~85mph in autopilot mode with no intervention required.
- throw121211 11y agoWhy would it be in Daimler's interest to push driver-less cars? Their sales would go down in the long run.
- TimCinel 11y agoLong term, driverless cars are going to happen so they might as well get in early. If you can't beat them, join them.
- ebbv 11y agoYeah but how much of a discount? The example in question was already assuming $50k per car which is already a tremendous discount. Even if you cut it in half again to $25k (which there's no way the price per car is that low) that's still $2.5B in cars. That's insanity.
- gk1 11y agoWhich is why I suspect this isn't a simple cash transaction, and may involve equity or revenue share or something along those lines.
- Retric 11y agoDepends on how this is structured, if it's say 33k cars on a five year lease, renewable twice that's ~2.5B over 15 years. Also, Uber has a huge and arguably inflated market cap, so if they get this deal in exchange for stock it could be very valuable to them in the short and long term.
- itchyouch 11y agoEspecially if there is no middle-man dealer to pay. On a $100k S-Class, Invoice comes in around $93k. Some people are able to pull off sub ~88k sale prices at dealers. I wouldn't be surprised if the wholesale (with profit) cost on a S-Class Benz is somewhere around 65-70k. I'd imagine that the cost of building an S-Class (100k retail) over a C-Class (~40k) is nominal.
- jmatthews 11y agoRespectfully, your inference is entirely off base. Trivial research gives you the wholesale value. A slightly deeper dive gives you the manufacturer margin. Franchise laws prohibit direct sales.
- deleted 11y ago[deleted]
- citricsquid 11y ago"Uber had placed a long-term order" [...] "Uber is particularly interested in autonomous driving vehicles, the magazine reported, adding that such cars are expected to be available after 2020." Perhaps the long-term order is a commitment from Uber to motivate Mercedes to invest more heavily in autonomous vehicles? If the long-term strategy of Uber is to have a fully autonomous fleet then a long-term commitment of $5bn with one manufacturer seems plausible.
- deleted 11y ago[deleted]
- lmm 11y agoThat's what, 1/9th of Uber's current valuation? And it's the heart of their business.
- logicallee 11y ago"it's the heart of their business" but the fact that it's a fundamentally alternative business model from anything they've taken a cent of revenue on is important to note. It's like if airbnb bought $5B of Manhattan real estate. Yes, it's "the heart of their business" but also - wow.
- alogray 11y agoSure - but I think it's always been the expectation that Uber/Lyft/Sidecar before it went bellyup were participating in the sharing economy only as a stopgap until autonomous cars are available. With Airbnb, I don't think anyone expects them to pivot into owning their own property. There's no real benefit.
- mixedbit 11y agoWell, if they expect to use them as self driving cars (which the article mentions), the investment can pay out pretty quickly. Say they can make on average 5$ per ride. To make $60k they need 12k rides. A self driving car should be able to easily make 12k rides in one year (only 32 rides per day).
- atmosx 11y agoThat was my thought actually - but reversed: Why on earth would they need that amount of cars when self-driving cars are just around the corner? If these are self-driving cars, it makes sense to me, otherwise it doesnt.
- nmrm2 11y agoRetro-fitting. They buy plain old cars and then slap their sensor suite on top.
- sirkneeland 11y agoThat seems way harder unless they plan on buying a very small number of car models. Every different car model (even the same model between years) has different performance characteristics (do you issue the same orders for "hit the brakes" to a car that needs 100ft to go from 40-0 as a car that needs 50ft?) and physical dimensions which would necessitate different software optimizations and sensor calibrations. Development plus rigorous testing of every configuration means this quickly gets out of hand unless you standardize on 1 or a very small number of models.
- nmrm2 11y agoHence buying 100k of the same car.
- marcosdumay 11y agoIt's hard to come up with a huge number of cars on the spot once self-driving cars are available. It's much easier to retrofit your already existing cars.
- adamt 11y agoThe deal is probably similar to the way an airline buys planes. E.g consider when Ryanair bought 200 737s for $22Bn [1] which is about the same in it's entire market cap. An order like this is probably: * For a delivery spread over 10+ years * The vehicles will almost certainly be leased/finance * Each vehicle will probably assume a 5+ year working life and have a residual of about perhaps 25% of list after 5 years given the likely mileage * There will be a big initial discount given the size of the order So assume each car, is $100k new, but given an order that size is perhaps a 40% discount. So that's a $60k sale. After 5 years, the car is perhaps worth 20k. So the unit economics are that each car costs (before financing costs) 40k over 5 years, or $8k a year. This is a relatively low cost given the number of rides it can take and the cost of the driver who will be driving it. On that basis is doesn't sound that expensive. [1] http://corporate.ryanair.com/news/news/14908-ryanair-places-order-for-up-to-200-new-boeing-737-max-200-aircraft-worth-up-to-22bn/?market=en http://corporate.ryanair.com/news/news/14908-ryanair-places-...
- rgbrenner 11y agoThe average taxi puts 70k miles per year on their car. So after 5 years these will have 350000 miles. Its not going to be worth anywhere near $20k
- hayksaakian 11y agoso they pay 800,000,000 per year for 5 years?
- pikachu_is_cool 11y ago$40,000/car * 100,000 cars = $4B. that's only a 20% discount over the course of 5 years.
- jmatthews 11y agoIn the states the franchise laws do not allow Uber to buy directly from the manufacturer. Also, the margin on an S class sold in the US is approximately 15%, not 60%.
- mmakunas 11y ago
- giarc 11y agoThe deal could be structured like contracts for planes. Uber placed an order for 10,000 vehicles with the option to purchase 90,000 more.
- eric001 11y agoYeah, I think you are missing _something_ ;)
- logicallee 11y agoI don't know, if I were an investor in Uber and saw them place a $5B order on Mercedes S-Class cars, I would think that there's a good chance they're worth $100B. Haha, I just checked. A recent valuation is $68B. (Dec '15)