4 ms·

The biggest cost is labor, so if they could theoretically shift to self-driving cars soon, fares would pay for more than 100% of ride cost. What that timeframe

by byoung2 10y ago

The biggest cost is labor, so if they could theoretically shift to self-driving cars soon, fares would pay for more than 100% of ride cost. What that timeframe is would be the $69 billion question. Given that self driving car technology is in its infancy, and will likely require a driver to be ready to take over, they can't ditch drivers anytime soon (unless they make passengers serve as backup drivers?).

auggierose 10y ago
Betting that big on driverless cars sounds like madness to me. But then again, maybe that's why it is the right thing to do?
OliverJones 10y ago
"Labor," huh? Uber's "laborers" also carry the capital cost, operating cost, and risk of the transportation service they provide. They own their vehicles and pay for fuel, maintenance, and insurance. Who covers those costs when no drivers are in the mix? Somebody has to pay for that stuff. It's still true that a big chunk of uber's success in big cities comes from dodging regulations and medallion costs. In other words, they are gypsy cabs with a slick app.
- VLM 10y ago
  "In other words, they are gypsy cabs with a slick app." My question is how do you lose money doing that? Ignore expensive regulations and licensing, automate the heck out of the backend, should make piles of money not lose. Maybe the losses are some form of hollywood accounting to keep the fire off the whole "ignore regulations" aspect of the business model.
  - i__believe 10y ago
    Hire too many expensive engineers?
peteboyd 10y ago
Let's say driverless cars happen in the next five to ten years. I see two scenarios happening - neither do I need uber. First scenario is my local car at my house becomes driverless. I can simply call my car to pick me up from anywhere. It can return home and wait (or go and pick up others as it's own on demand taxi). I now don't need uber at all - even though I use them now. So that is not a good scenario. Second scenario is I am traveling and need a car/taxi as my local car is at home. If so, why would not other people in that city simply allow for their cars to pick me up while they are not in use. Every driverless car is now a taxi. Basically all that is needed is an app and some service where owners subscribe and let their cars be used as a taxi. Perhaps uber controls the app and service as the dominant leader. But I bet there will be a lot of competition in that area with car rental companies, manufacturers, local cab companies, individuals and uber all competing. I suppose the third scenario is that many people do not own a car in the future and we just subscribe to a car service. Perhaps in that area uber is the choice. But perhaps the manuacturers roll their own service too that you subscribe for a time share of a car.
- jpalomaki 10y ago
  Or could you actually get rid of your own car and ride only on Uber? Due to it's scale, Uber might be able to offer competitive pricing. If there is no driver involved the cost structure for you and Uber is pretty much the same. Except Uber can probably negotiate better deals on new cars and service (due to volume) and also achieve higher utilization. On the other hand, Uber of course needs to make a profit.
  - prostoalex 10y ago
    > Uber can probably negotiate better deals on new cars and service (due to volume) Same argument could be applied to car rental businesses (some of which are owned by automakers which makes the relationship super-cozy), yet I've never seen a deal from Avis or Hertz to make it a worthwhile replacement to owning. Big cities have an added cost of parking and extra miles driven to find a gas station or a public charger. But big cities also have low-cost public transportation (or so I've heard, I live in LA). In smaller towns the cost of ownership tends to be lower and with sub-$10,000 products on the market http://jalopnik.com/5072303/new-pricing-of-9990-makes-2009-nissan-versa-cheapest-new-car-in-usa http://jalopnik.com/5072303/new-pricing-of-9990-makes-2009-n... you have a reliable guaranteed ride whose cost is usually spread over 6-7 years.
femto113 10y ago
Uber's drivers aren't just a labor cost, they are one of the company's main sources of capital since it is the drivers who must buy or lease the cars and make the payments. Here in Seattle there are around 9,000 drivers, presumably with roughly one car each costing about $25,000 apiece (avg. Prius), or over $200MM in capital equipment for just one city. Current estimates are that an Uber driver working full time nets <$40,000 per year not including the cost of the car, which is likely at least $6,000 in payments. There are over 160,000 Uber drivers in the US, collectively they're paying about $1BN a year to provide the cars for Uber. In a driverless model that cost is entirely shifted to Uber itself.
- josh2600 10y ago
  Yes but Uber would benefit from fleet pricing on purchasing and maintenance as well as the centralization of facilities (you could put the Uber fleet offices far away since the cars can drive themselves there for servicing). Uber might have a compelling narrative here.
  - soufron 10y ago
    That's a sentence Ford would say ;)
  - femto113 10y ago
    Facilities = more capital. Just the yard to park and service 9000 vehicles is a lot to buy and then there's the buildings: if each car needs service just once a year you'd need at least half a dozen service bays running full time.
  - smrtinsert 10y ago
    one all cars drive themselves we dont need uber or anyone can get into the game.
- soufron 10y ago
  The hope they will be able to shift that cost to car companies... ... but what would prevent car companies to deploy their own Uber-like network? The cost of the software is low and the design has been proven. Uber is the Lycos of transportation.
jpalomaki 10y ago
If the business is large enough, you could combine drivers and AI. For example when hauling people to/from airports, the difficult situations usual arise on the city end. The airport and highway part could be "easily" covered by AI. Driver would jump to car closer to the city. Or you could use different vehicles. AI driven minibus for long haul and current driver system for shorter distances. If the system runs smoothly (no extra waiting) and pricing is right, I could imagine using something like this.
rtpg 10y ago
Serious question: why bother with the current Uber service? Why not just focus all money on self driving and not spend money on subsidized rides. My guess is that self driving is a scapegoat , and that their business model is more simple: push driver wages down + surge pricing + extinguish competitors. No need for tech there.
- mnx 10y ago
  How is subsidizing rides pushing wages down?
prostoalex 10y ago
Owning, repairing, cleaning, maintaining, parking and fueling (re-charging) self-driving cars is fleet management, which Uber doesn't really have a lot of experience with.

by byoung2 10y ago

auggierose 10y ago

Betting that big on driverless cars sounds like madness to me. But then again, maybe that's why it is the right thing to do?

OliverJones 10y ago

"Labor," huh? Uber's "laborers" also carry the capital cost, operating cost, and risk of the transportation service they provide. They own their vehicles and pay for fuel, maintenance, and insurance. Who covers those costs when no drivers are in the mix? Somebody has to pay for that stuff. It's still true that a big chunk of uber's success in big cities comes from dodging regulations and medallion costs. In other words, they are gypsy cabs with a slick app.

VLM 10y ago
"In other words, they are gypsy cabs with a slick app." My question is how do you lose money doing that? Ignore expensive regulations and licensing, automate the heck out of the backend, should make piles of money not lose. Maybe the losses are some form of hollywood accounting to keep the fire off the whole "ignore regulations" aspect of the business model.
- i__believe 10y ago
  Hire too many expensive engineers?

peteboyd 10y ago

Let's say driverless cars happen in the next five to ten years. I see two scenarios happening - neither do I need uber. First scenario is my local car at my house becomes driverless. I can simply call my car to pick me up from anywhere. It can return home and wait (or go and pick up others as it's own on demand taxi). I now don't need uber at all - even though I use them now. So that is not a good scenario. Second scenario is I am traveling and need a car/taxi as my local car is at home. If so, why would not other people in that city simply allow for their cars to pick me up while they are not in use. Every driverless car is now a taxi. Basically all that is needed is an app and some service where owners subscribe and let their cars be used as a taxi. Perhaps uber controls the app and service as the dominant leader. But I bet there will be a lot of competition in that area with car rental companies, manufacturers, local cab companies, individuals and uber all competing. I suppose the third scenario is that many people do not own a car in the future and we just subscribe to a car service. Perhaps in that area uber is the choice. But perhaps the manuacturers roll their own service too that you subscribe for a time share of a car.

jpalomaki 10y ago
Or could you actually get rid of your own car and ride only on Uber? Due to it's scale, Uber might be able to offer competitive pricing. If there is no driver involved the cost structure for you and Uber is pretty much the same. Except Uber can probably negotiate better deals on new cars and service (due to volume) and also achieve higher utilization. On the other hand, Uber of course needs to make a profit.
- prostoalex 10y ago
  > Uber can probably negotiate better deals on new cars and service (due to volume) Same argument could be applied to car rental businesses (some of which are owned by automakers which makes the relationship super-cozy), yet I've never seen a deal from Avis or Hertz to make it a worthwhile replacement to owning. Big cities have an added cost of parking and extra miles driven to find a gas station or a public charger. But big cities also have low-cost public transportation (or so I've heard, I live in LA). In smaller towns the cost of ownership tends to be lower and with sub-$10,000 products on the market http://jalopnik.com/5072303/new-pricing-of-9990-makes-2009-nissan-versa-cheapest-new-car-in-usa http://jalopnik.com/5072303/new-pricing-of-9990-makes-2009-n... you have a reliable guaranteed ride whose cost is usually spread over 6-7 years.

femto113 10y ago

Uber's drivers aren't just a labor cost, they are one of the company's main sources of capital since it is the drivers who must buy or lease the cars and make the payments. Here in Seattle there are around 9,000 drivers, presumably with roughly one car each costing about $25,000 apiece (avg. Prius), or over $200MM in capital equipment for just one city. Current estimates are that an Uber driver working full time nets <$40,000 per year not including the cost of the car, which is likely at least $6,000 in payments. There are over 160,000 Uber drivers in the US, collectively they're paying about $1BN a year to provide the cars for Uber. In a driverless model that cost is entirely shifted to Uber itself.

josh2600 10y ago
Yes but Uber would benefit from fleet pricing on purchasing and maintenance as well as the centralization of facilities (you could put the Uber fleet offices far away since the cars can drive themselves there for servicing). Uber might have a compelling narrative here.
- soufron 10y ago
  That's a sentence Ford would say ;)
- femto113 10y ago
  Facilities = more capital. Just the yard to park and service 9000 vehicles is a lot to buy and then there's the buildings: if each car needs service just once a year you'd need at least half a dozen service bays running full time.
- smrtinsert 10y ago
  one all cars drive themselves we dont need uber or anyone can get into the game.
soufron 10y ago
The hope they will be able to shift that cost to car companies... ... but what would prevent car companies to deploy their own Uber-like network? The cost of the software is low and the design has been proven. Uber is the Lycos of transportation.

jpalomaki 10y ago

If the business is large enough, you could combine drivers and AI. For example when hauling people to/from airports, the difficult situations usual arise on the city end. The airport and highway part could be "easily" covered by AI. Driver would jump to car closer to the city. Or you could use different vehicles. AI driven minibus for long haul and current driver system for shorter distances. If the system runs smoothly (no extra waiting) and pricing is right, I could imagine using something like this.

rtpg 10y ago

Serious question: why bother with the current Uber service? Why not just focus all money on self driving and not spend money on subsidized rides. My guess is that self driving is a scapegoat , and that their business model is more simple: push driver wages down + surge pricing + extinguish competitors. No need for tech there.

mnx 10y ago
How is subsidizing rides pushing wages down?

prostoalex 10y ago

Owning, repairing, cleaning, maintaining, parking and fueling (re-charging) self-driving cars is fleet management, which Uber doesn't really have a lot of experience with.