6 ms·

Uber and Lyft don't make money until they're able to replace their drivers with autonomous cars. 80% of an Uber fair goes to the driver, so once they are able

Uber and Lyft don't make money until they're able to replace their drivers with autonomous cars. 80% of an Uber fair goes to the driver, so once they are able to replace the driver with an autonomous car, there's no reason why competition between the two companies would not drive fare prices down.

foobarbecue 10y ago
Don't confuse the fare with what's fair...
yabatopia 10y ago
At the current burn rate, they will be bankrupt long before the widespread deployment of autonomous cars is a reality. Even if that takes only a decade, good luck finding the funding to keep covering the losses.
- zepn 10y ago
  Probably true, but these companies will be among the first to deploy; no need to measure against general "widespread deployment". There are autonomous taxis already, albeit not quite yet in the wild.
  - beagle3 10y ago
    There is no autonomous car that has been certified to be without someone who can drive it inside - and it's likely that such certification is still a few years away. I would guess it will take 2-3 years of cars driving on their own with hardly ever any need for a person to intervene before such certification is given. In my city there are many small streets with bad traffic and environment, that at least once a week I need to verbally negotiate with other drivers who goes first and who goes back. If all cars are autonomous, they may negotiate that; But if only half are, I don't see how this will work. Most US cities have the benefit of being built for cars; But most European cities do not; and even in the NYC, there are weird small streets that often require negotiation among drivers.
    - coldcode 10y ago
      I have not seen autonomous cars drive in snow and ice and road construction on any regular basis. Until that works I can't imagine driverless cars anywhere except in good weather states.
    - jessaustin 10y ago
      In NYC at least, robocars could just avoid the goofy streets, since the easily navigable streets are never that far away.
      - avn2109 10y ago
        What if your apartment is on a goofy street?
        dripton 10y ago
        Pickup / dropoff at nearest non-goofy intersection.
        wutbrodo 10y ago
        There's a whole spectrum from door-to-door taxi service to fixed-route public transit. I don't see why consumer expectations couldn't be set such that it's not weird to be dropped off a block or two away. Take a (more expensive) manned car if you need to be dropped at your door step. The same tradeoff id already at play with buses vs taxis/Uber.
        morgante 10y ago
        Plus there's already a precedent in Uber Pool for something that's in between a bus and a taxi. They even will ask you to walk a short distance sometimes.
  - seibelj 10y ago
    Wow! Really? My commute from the southern edge of Boston (Jamaica Plain) to the northern part (Allston / HBS) on Friday involved 2 road constructions, a car stopped inside a rotary that made the entire loop gridlocked, and countless pedestrians jay walking because the fine was reduced to $1 in the 1970's so no one cares.[0] I'm not sure people who live in grid cities and calm suburbs can even comprehend the madness here. Self-driving cars will take decades here. [0] http://www.mass.gov/courts/selfhelp/tickets/jaywalking.html http://www.mass.gov/courts/selfhelp/tickets/jaywalking.html
    - stale2002 10y ago
      Who cares? If self driving cars work for 50 percent of cities, that is still massively massively revolutionary. That's still trillions of dollars. People are underestimating how game changing "mostly working" self driving cars are.
- stale2002 10y ago
  Fortunately for them, every major company that is working on selfdriving cars has been yelling about 2020 as the date of release for level 4 autonomous vehicles. So they only need to wait 3 years, not 10. The legal problems that everyone talks about will be (comparatively) minor. A bunch of pro-innovation, anti gov regulation red states like Arizona will fully legalize it (why do you think Ubers CEO has been meeting with Trump?) , and the rest will follow once these states test drive the cars at scale, and they start to save thousands of lives.
tiplus 10y ago
It's phase two (2020+). Once the tech is ready, Uber will have to order at an enormous scale with large discounts from whoever gets the contract. There were rumors that Uber considers Daimler as a car hardware platform partner. http://www.reuters.com/article/us-daimler-uber-idUSKCN0WK1C8 http://www.reuters.com/article/us-daimler-uber-idUSKCN0WK1C8 However, quickly there will be many new local competitors. Who wouldn't start such a business in their own local town anywhere? Buy a few cheaper autonomous cars (10 Model III+upgrades) and have them drive around your neighborhood. Call it 'EcoGreenCar LLC'. There will certainly even be an open source software platform to manage autonomous micro fleets.
- scirocco 10y ago
  It's truly fascinating how everything will become as-a-service. Truck and car manufacturers will have to disrupt their business models, as their customers will be fewer, but larger - known as Service Providers. This is exactly what is happening in the IT Hardware business, where small companies can't motivate the cost of having their own internal datacenter (having to pay for staff, infrastructure, real estate, electricity etc). Rather, they outsource to "Local Service Provider LLC" (Managed Private Cloud), or AWS (Public Cloud)... Both IT Hardware providers and truck manufacturere are experiencing "commoditization". The HW itself becomes less important. Why do I care if my truck has the latest V8 with Bosch 2.34 injection? I just want my fleet to operate smoothly. Many companies can no longer sell "just products", they must evolve and sell the services to create outcomes that a) reduces costs or b) generates extra revenue or c) reduces risk for their end-customers. It's a major change for any large corp, which I believe many will not be able to achieve in time. Good article on this topic: https://www.nytimes.com/2016/07/27/business/dealbook/1-billion-for-dollar-shave-club-why-every-company-should-worry.html https://www.nytimes.com/2016/07/27/business/dealbook/1-billi...
disordinary 10y ago
It will be interesting to see what happens when autonomous cars are wide spread, we may see a democratisation of the industry. If I own a Tesla I might want it to pay for itself by providing rides while I'm at work or sleep, the amount of vehicles with the capability would drive up availability and drive down costs. Because the cars are all smart the value of an uber or a lyft as a middle man is decreased.
- bsbechtel 10y ago
  Ironically ride sharing was supposed to democratize the taxi industry. It did and we got two major players instead of thousands of small and medium sized players.
- AlexandrB 10y ago
  So you'd be willing to rent out your $50,000 car to complete strangers without even being there to act as a social deterrent to them making a huge fucking mess of it. Public infrastructure experiences a lot of vandalism and abuse. Prepare for your car to be treated like public infrastructure.
  - username223 10y ago
    > Public infrastructure experiences a lot of vandalism and abuse. Prepare for your car to be treated like public infrastructure. Prepare for your car to have interior cameras and a load of other sensors (e.g. smoke detector) constantly streaming to "the cloud." Of course, there will be no way to turn them off, because then passengers would do that. Then you just bill the passenger for the damages, and send him a link to the incriminating footage. Then again, I would hate to use my personal car as a taxi, or my spare bedroom as a hotel, so I'm clearly not a good candidate for the "sharing" economy. Maybe I'm not desperate enough.
  - motoboi 10y ago
    A metro car can't lock its doors and drive to the nearest police station. That should give enough deterrence.
edblarney 10y ago
Once there are 'self driving cars' there's really very little advantage in the brand monopolies they have. Why? Because they don't need to attract drivers. Car rental entities are huge and have the capex to invest in something like this - and they have 'feet on the ground' everywhere. 'Call Avis to get to work'. If 'self driving cars' actually become a thing it will change many things.
Someone 10y ago
”Uber and Lyft don't make money until they're able to replace their drivers with autonomous cars” ”with an autonomous car, there's no reason why competition between the two companies would not drive fare prices down.” So, what is it, will they become profitable because they will be able to decrease their costs, or will they have to cut prices because their competitors are able to do so because they will be able to decrease their* costs? Or do you think they will be able to split that between the two? I think the only benefits that burning money at tremendous rate buys these companies are scale and mindshare. I doubt either will be worth enough in the long term to warrant the current expenses; for scale, I even doubt whether having scale at the level they aim for is worth having at all. If it were advantageous, I think we already would have had international taxi companies. I see two possible cop-outs, but don’t think they are worth their current expenses. The first is if either of them managed to effectively become a monopoly. I don’t see that happen, and if it does, I expect quite a few governments across the globe to take action to correct that. The second is that lower prices that autonomous cars will afford them would grow the market (if their margin per ride halves, but the number of rides quadruples, their revenue will double). That might be possible, but I fear they need unrealistically high market growth to have that make them a winner.
tuna-piano 10y ago
I really don't think this view holds any merit. I can't possibly see how this would be Uber's strategy. Assume that in year 20XX, when autonomous cars finally become a thing, there are two companies. Uber, which has accumulated $X billion in debt while growing it's driver network, and brand new company NewAutonomousCompany, with no debt. What possible advantages does Uber have in that situation that makes that debt worthwhile? It will have some software and the fact that users already downloaded an app - but will that really be worth the subsidies?
- fragmede 10y ago
  > It will have some software and the fact that users already downloaded an app - but will that really be worth the subsidies? Uber has one more thing that they're funneling piles of money into - a self-driving vehicles department. They'll have a significant advantage if they're the first to "market" with fully autonomous self-driving vehicles. Right now it's a huge money sink, but research often is.
- colbyh 10y ago
  map data, user data, etc. that stuff isn't free.
  - manarth 10y ago
    I'd disagree on the subject of 'map data': Open Street Map is a good example of free, open map data. Whatever map data Uber/Lyft started with (and have perhaps since augmented with proprietary GPS data supplied by their apps), is it enough of a competitive advantage?
- stale2002 10y ago
  "20XX, .... X billion dollars" Is this a math equation? Can I solve for X? X=2. 2022 for self driving car release is around what all self driving car companies are saying for release.
- ams6110 10y ago
  Uber can simply declare bankruptcy and reorganize at that time.
JBlue42 10y ago
For myself, and I'm sure others, the apps took off because: 1) Fares were lower when the 'x' versions came out. Original Uber was limo/SUVs to/from LAX and out of my price range. Then UberX came out. I don't use Lyft Line or whatever Uber's version of that is. I only 'share' rides with friends. 2) Convenience. The apps made it convenient to call and get an accurate assessment of when a car will show up. It sucked getting a taxi company to send a car reliably and know when they'll be around. 3) Crap drivers. In LA, every taxi I took I had to direct them step-by-step (unless it was an airport pickup as those folks seemed to know what they were doing) and they weren't that great to interact with, if it was necessary. For the most part, Lyft drivers have been great (if sometimes weird). Uber drivers the past few years have seemed to basically be former taxi drivers. Even after years of using the apps (and I mainly use Lyft now) I still think of it like the gypsy cabs I used to get in Russia, only much safer (for me as a guy) and more formalized (no haggling over payment). It will be really interesting to see how Uber/Lyft and whoever else come along do when autonomous cars come along. I hope it's not a race to the bottom in terms of safety and reliability. I also wonder what will happen to the drivers. I think right now people mainly use it to make some extra cash. I'm assuming there are some full-time Uber/Lyft drivers? But it will be another victim in this 'gig' economy where low/no-skills are replaced by automation. My only other concern is who is going to clean up the trash from the cars after each ride? Will there be a vomit alert or tax if you someone gets sick in the back after a wild night out? It would seem you would almost need a car to come in for service after most every ride unless it's somehow being monitored.

foobarbecue 10y ago

Don't confuse the fare with what's fair...

yabatopia 10y ago

At the current burn rate, they will be bankrupt long before the widespread deployment of autonomous cars is a reality. Even if that takes only a decade, good luck finding the funding to keep covering the losses.

zepn 10y ago
Probably true, but these companies will be among the first to deploy; no need to measure against general "widespread deployment". There are autonomous taxis already, albeit not quite yet in the wild.
- beagle3 10y ago
  There is no autonomous car that has been certified to be without someone who can drive it inside - and it's likely that such certification is still a few years away. I would guess it will take 2-3 years of cars driving on their own with hardly ever any need for a person to intervene before such certification is given. In my city there are many small streets with bad traffic and environment, that at least once a week I need to verbally negotiate with other drivers who goes first and who goes back. If all cars are autonomous, they may negotiate that; But if only half are, I don't see how this will work. Most US cities have the benefit of being built for cars; But most European cities do not; and even in the NYC, there are weird small streets that often require negotiation among drivers.
  - coldcode 10y ago
    I have not seen autonomous cars drive in snow and ice and road construction on any regular basis. Until that works I can't imagine driverless cars anywhere except in good weather states.
  - jessaustin 10y ago
    In NYC at least, robocars could just avoid the goofy streets, since the easily navigable streets are never that far away.
    - avn2109 10y ago
      What if your apartment is on a goofy street?
      - dripton 10y ago
        Pickup / dropoff at nearest non-goofy intersection.
      - wutbrodo 10y ago
        There's a whole spectrum from door-to-door taxi service to fixed-route public transit. I don't see why consumer expectations couldn't be set such that it's not weird to be dropped off a block or two away. Take a (more expensive) manned car if you need to be dropped at your door step. The same tradeoff id already at play with buses vs taxis/Uber.
        morgante 10y ago
        Plus there's already a precedent in Uber Pool for something that's in between a bus and a taxi. They even will ask you to walk a short distance sometimes.
- seibelj 10y ago
  Wow! Really? My commute from the southern edge of Boston (Jamaica Plain) to the northern part (Allston / HBS) on Friday involved 2 road constructions, a car stopped inside a rotary that made the entire loop gridlocked, and countless pedestrians jay walking because the fine was reduced to $1 in the 1970's so no one cares.[0] I'm not sure people who live in grid cities and calm suburbs can even comprehend the madness here. Self-driving cars will take decades here. [0] http://www.mass.gov/courts/selfhelp/tickets/jaywalking.html http://www.mass.gov/courts/selfhelp/tickets/jaywalking.html
  - stale2002 10y ago
    Who cares? If self driving cars work for 50 percent of cities, that is still massively massively revolutionary. That's still trillions of dollars. People are underestimating how game changing "mostly working" self driving cars are.
stale2002 10y ago
Fortunately for them, every major company that is working on selfdriving cars has been yelling about 2020 as the date of release for level 4 autonomous vehicles. So they only need to wait 3 years, not 10. The legal problems that everyone talks about will be (comparatively) minor. A bunch of pro-innovation, anti gov regulation red states like Arizona will fully legalize it (why do you think Ubers CEO has been meeting with Trump?) , and the rest will follow once these states test drive the cars at scale, and they start to save thousands of lives.

tiplus 10y ago

It's phase two (2020+). Once the tech is ready, Uber will have to order at an enormous scale with large discounts from whoever gets the contract. There were rumors that Uber considers Daimler as a car hardware platform partner. http://www.reuters.com/article/us-daimler-uber-idUSKCN0WK1C8 http://www.reuters.com/article/us-daimler-uber-idUSKCN0WK1C8 However, quickly there will be many new local competitors. Who wouldn't start such a business in their own local town anywhere? Buy a few cheaper autonomous cars (10 Model III+upgrades) and have them drive around your neighborhood. Call it 'EcoGreenCar LLC'. There will certainly even be an open source software platform to manage autonomous micro fleets.

scirocco 10y ago
It's truly fascinating how everything will become as-a-service. Truck and car manufacturers will have to disrupt their business models, as their customers will be fewer, but larger - known as Service Providers. This is exactly what is happening in the IT Hardware business, where small companies can't motivate the cost of having their own internal datacenter (having to pay for staff, infrastructure, real estate, electricity etc). Rather, they outsource to "Local Service Provider LLC" (Managed Private Cloud), or AWS (Public Cloud)... Both IT Hardware providers and truck manufacturere are experiencing "commoditization". The HW itself becomes less important. Why do I care if my truck has the latest V8 with Bosch 2.34 injection? I just want my fleet to operate smoothly. Many companies can no longer sell "just products", they must evolve and sell the services to create outcomes that a) reduces costs or b) generates extra revenue or c) reduces risk for their end-customers. It's a major change for any large corp, which I believe many will not be able to achieve in time. Good article on this topic: https://www.nytimes.com/2016/07/27/business/dealbook/1-billion-for-dollar-shave-club-why-every-company-should-worry.html https://www.nytimes.com/2016/07/27/business/dealbook/1-billi...

disordinary 10y ago

It will be interesting to see what happens when autonomous cars are wide spread, we may see a democratisation of the industry. If I own a Tesla I might want it to pay for itself by providing rides while I'm at work or sleep, the amount of vehicles with the capability would drive up availability and drive down costs. Because the cars are all smart the value of an uber or a lyft as a middle man is decreased.

bsbechtel 10y ago
Ironically ride sharing was supposed to democratize the taxi industry. It did and we got two major players instead of thousands of small and medium sized players.
AlexandrB 10y ago
So you'd be willing to rent out your $50,000 car to complete strangers without even being there to act as a social deterrent to them making a huge fucking mess of it. Public infrastructure experiences a lot of vandalism and abuse. Prepare for your car to be treated like public infrastructure.
- username223 10y ago
  > Public infrastructure experiences a lot of vandalism and abuse. Prepare for your car to be treated like public infrastructure. Prepare for your car to have interior cameras and a load of other sensors (e.g. smoke detector) constantly streaming to "the cloud." Of course, there will be no way to turn them off, because then passengers would do that. Then you just bill the passenger for the damages, and send him a link to the incriminating footage. Then again, I would hate to use my personal car as a taxi, or my spare bedroom as a hotel, so I'm clearly not a good candidate for the "sharing" economy. Maybe I'm not desperate enough.
- motoboi 10y ago
  A metro car can't lock its doors and drive to the nearest police station. That should give enough deterrence.

edblarney 10y ago

Once there are 'self driving cars' there's really very little advantage in the brand monopolies they have. Why? Because they don't need to attract drivers. Car rental entities are huge and have the capex to invest in something like this - and they have 'feet on the ground' everywhere. 'Call Avis to get to work'. If 'self driving cars' actually become a thing it will change many things.

Someone 10y ago

”Uber and Lyft don't make money until they're able to replace their drivers with autonomous cars” ”with an autonomous car, there's no reason why competition between the two companies would not drive fare prices down.” So, what is it, will they become profitable because they will be able to decrease their costs, or will they have to cut prices because their competitors are able to do so because they will be able to decrease their* costs? Or do you think they will be able to split that between the two? I think the only benefits that burning money at tremendous rate buys these companies are scale and mindshare. I doubt either will be worth enough in the long term to warrant the current expenses; for scale, I even doubt whether having scale at the level they aim for is worth having at all. If it were advantageous, I think we already would have had international taxi companies. I see two possible cop-outs, but don’t think they are worth their current expenses. The first is if either of them managed to effectively become a monopoly. I don’t see that happen, and if it does, I expect quite a few governments across the globe to take action to correct that. The second is that lower prices that autonomous cars will afford them would grow the market (if their margin per ride halves, but the number of rides quadruples, their revenue will double). That might be possible, but I fear they need unrealistically high market growth to have that make them a winner.

tuna-piano 10y ago

I really don't think this view holds any merit. I can't possibly see how this would be Uber's strategy. Assume that in year 20XX, when autonomous cars finally become a thing, there are two companies. Uber, which has accumulated $X billion in debt while growing it's driver network, and brand new company NewAutonomousCompany, with no debt. What possible advantages does Uber have in that situation that makes that debt worthwhile? It will have some software and the fact that users already downloaded an app - but will that really be worth the subsidies?

fragmede 10y ago
> It will have some software and the fact that users already downloaded an app - but will that really be worth the subsidies? Uber has one more thing that they're funneling piles of money into - a self-driving vehicles department. They'll have a significant advantage if they're the first to "market" with fully autonomous self-driving vehicles. Right now it's a huge money sink, but research often is.
colbyh 10y ago
map data, user data, etc. that stuff isn't free.
- manarth 10y ago
  I'd disagree on the subject of 'map data': Open Street Map is a good example of free, open map data. Whatever map data Uber/Lyft started with (and have perhaps since augmented with proprietary GPS data supplied by their apps), is it enough of a competitive advantage?
stale2002 10y ago
"20XX, .... X billion dollars" Is this a math equation? Can I solve for X? X=2. 2022 for self driving car release is around what all self driving car companies are saying for release.
ams6110 10y ago
Uber can simply declare bankruptcy and reorganize at that time.

JBlue42 10y ago

For myself, and I'm sure others, the apps took off because: 1) Fares were lower when the 'x' versions came out. Original Uber was limo/SUVs to/from LAX and out of my price range. Then UberX came out. I don't use Lyft Line or whatever Uber's version of that is. I only 'share' rides with friends. 2) Convenience. The apps made it convenient to call and get an accurate assessment of when a car will show up. It sucked getting a taxi company to send a car reliably and know when they'll be around. 3) Crap drivers. In LA, every taxi I took I had to direct them step-by-step (unless it was an airport pickup as those folks seemed to know what they were doing) and they weren't that great to interact with, if it was necessary. For the most part, Lyft drivers have been great (if sometimes weird). Uber drivers the past few years have seemed to basically be former taxi drivers. Even after years of using the apps (and I mainly use Lyft now) I still think of it like the gypsy cabs I used to get in Russia, only much safer (for me as a guy) and more formalized (no haggling over payment). It will be really interesting to see how Uber/Lyft and whoever else come along do when autonomous cars come along. I hope it's not a race to the bottom in terms of safety and reliability. I also wonder what will happen to the drivers. I think right now people mainly use it to make some extra cash. I'm assuming there are some full-time Uber/Lyft drivers? But it will be another victim in this 'gig' economy where low/no-skills are replaced by automation. My only other concern is who is going to clean up the trash from the cars after each ride? Will there be a vomit alert or tax if you someone gets sick in the back after a wild night out? It would seem you would almost need a car to come in for service after most every ride unless it's somehow being monitored.