I believe the point is that when autonomous vehicles are allowed on the road then those companies can undercut Uber's cost by whatever % they pay their drivers

I believe the point is that when autonomous vehicles are allowed on the road then those companies can undercut Uber's cost by whatever % they pay their drivers (≈40%?). It's more of survival for Uber to get their own autonomous driving technology than it is an alternative business model. Without it they'll get priced out of the market.