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Uber CEO Says He’d Buy 500k Self-Driving Cars From Tesla Motors

70 points by butwhy 11y ago

hooo 11y ago
I don't understand why they'd do this. My understanding is that the Tesla self-driving cars are not end-to-end autonomous like Google's. What benefit would they be to Uber in this case?
- aetherson 11y ago
  The whole article basically says that Travis says that he'll buy half a million Tesla cars in 2020 if Tesla can actually make the cars fully autonomous by then. Fully driverless cars are still not going to be a good thing for Uber.
  - anthony_d 11y ago
    Why do you say fully driverless cars are not a good thing for Uber? Most of what I've read on the topic says otherwise.
    - toomuchtodo 11y ago
      Uber only has a lead as long as it has exclusive access to self driving cars. If anyone can buy them, there is zero barrier to entry.
      - anthony_d 11y ago
        They don't have exclusive access to cars currently and that doesn't seem to be a problem. There are a lot of people who won't buy cars if autonomous cars are available. 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.
    - evgen 11y ago
      Because there is no reason for the manufacturer to sell to Uber and Uber has no value proposition if driverless cars become real. If you are the builder of driverless cars why would you want Uber to dominate the market and be in a position to eventually dictate terms to you when you can instead sell at a premium to Uber's desperate competitors or just create your own car agency and laugh all the way to the bank as Uber becomes the next WebVan...
    - aetherson 11y ago
      There are a ton of reasons: 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.
      - anthony_d 11y ago
        That's just not convincing. 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.
        aetherson 11y ago
        Dude, I don't know what to say. 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.
  - ulfw 11y ago
    And why wouldn't Tesla just 'run' them themselves? Besides a little iPhone/Android booking app, what is Uber without the drivers?
smackfu 11y ago
Uber has been investing heavily themselves in self-driving cars. They know that Tesla won't have a product available to buy in 2020. 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."
- fredkbloggs 11y ago
  He also told him, seemingly apropos of nothing, that "if [his] grandmother had balls, she'd be [his] grandfather." Unfortunately the meaning of this exchange was apparently lost on the journalist.
ctdonath 11y ago
But...Uber's core competency is organizing drivers & vehicles without hiring/owning them. I'm leery of companies making dramatic change to their core; owning a fleet of a half-million vehicles is quite different from just telling them where to go.
- yincrash 11y ago
  Netflix's core competency was mailing DVDs.
  - ctdonath 11y ago
    Netflix's original goal, AFAIK, was to provide streaming monthly-subscription video service. Mailing DVDs was a means to build that business when that core still wasn't technically possible. I doubt Uber's original goal was to outright own (with all the hassle & overhead thereof) a half-million vehicles.
  - aetherson 11y ago
    And they went from having their business depend on having a physical inventory to a (more) purely software model. 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.
    - austenallred 11y ago
      > 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. So the craziest part of a self-driving, autonomous, on-demand taxi service is that someone had to buy a bunch of cars?
fredkbloggs 11y ago
Ah, the old valuation chestnut. There ought to be a journalism ethics rule prohibiting use of the word "valuation" with respect to previous transactions unless every such transaction was purely for common equity. The only idea sillier than that every (or any!) investor actually values Uber at $50b is that they can get their hands on $20b to buy 500,000 fully autonomous cars in 2020. No part of this assertion is sane, and no part will come to fruition. The cars Uber would need won't exist in 2020, and probably not in 2120 either. To the extent that someone does manage to build one, it won't be available for anything like $40,000, and it won't be built in any quantity. Uber itself may not even exist in 2020, and if it does it will likely be a shell of its former high-flying self, reined in by the same regulations its direct competitors all have to abide by. Utter rubbish.
- nostrademons 11y ago
  I'm curious - do you live in Silicon Valley? Because I see self-driving cars so often here that it's a non-event, and half the time, there's nobody touching the steering wheel. My former boss has ridden in one, and there were signups for an employee beta-test program before I left Google a year ago. I could easily believe that they will be in the hands of consumers by 2020, and I could believe they'll cost $40K once the sensors they need are in volume production. The technology's a lot more advanced than the handful of press articles make you believe.
  - nkoren 11y ago
    > Because I see self-driving cars so often here that it's a non-event 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.
    - Diederich 11y ago
antidaily 11y ago
More proof that CEOs are grossly overpaid. Who needs that many cars? Just disgusting.
- jegutman 11y ago
  trolololo
bagels 11y ago
At $30,000 each, that's 15 billion in cost. That's a lot of money to raise for depreciating assets.
- chrisper 11y ago
  Pretty sure it would be leased. Also aren't depreciating assets "good" for taxes?
- krschultz 11y ago
  However that is pretty typical for industries other than software. Usually you need factories or raw materials or buildings or inventory. All of these things are expensive and depreciate. Software is the outlier.
- jonknee 11y ago
  They would finance the vehicles and pay for them with the revenue they produce. Rental cars are actually a pretty good case of this for conventional vehicles.
nugget 11y ago
I've said this before but it strikes me as under appreciated that Uber's main enterprise value is their network of drivers and their logistical expertise in managing and coordinating that network. Once self-driving cars become mainstream, wouldn't that start to erode the value of Uber's critical dominance in this area? A generation from now if I'm choosing between self-driving fleets of cabs from Uber, Lyft, Google, Facebook+Ford, and some Tesla joint venture, wouldn't prices suffer significant downward pressures? The best operators can still make a nice profit but nothing like the monopolistic profits Microsoft, Google, and Facebook extracted from OS, search, and social which seems to be required for a sustained multi hundred billion dollar valuation.
- toomuchtodo 11y ago
  Yes. Brands will have some value, but self driving rides are going to get commoditized very rapidly.
- onion2k 11y ago
  There'd still be a lot to differentiate on if you remove the driver - car quality (nicer/bigger/quieter cars), speed of journey (who has the best routing algorithm that uses the most real world sensors to route around problems), the most cars (so your wait is shorter), the most reliable network (plenty of redundant cars waiting if yours breaks down), the best app features, and so on. Removing the driver won't be the last innovation these companies do.
  - nostrademons 11y ago
    Google has an advantage over Uber in all of those respects though - more capital, more experience building highly-available services, better routing algorithms, better contacts with carmakers, owns both the OS that the app will run on and the map data that they use to navigate, etc.
    - CyberDildonics 11y ago
      All of that pales in comparison to the fact that google has a direct line to more users. They can auto update their apps and allow people to book a driverless car.
segmondy 11y ago
Why shouldn't Tesla take their self-driving cars, make an app and "Uberify" it.
- austenallred 11y ago
  In a word, specialization. Worrying about self driving cars is probably enough of a challenge, but that's my best guess.
  - segmondy 11y ago
    I don't think so. It will boil down to fleet management. Tesla is bypassing the middle man to sell cars directly. If we combine self driving cars and Uber, then most of us will not be buying cars and instead will be renting by usage. So why shouldn't Tesla bypass the middle man again and reap the profits?
deleted 11y ago
[deleted]
falsestprophet 11y ago
There is some real news here: Uber (probably) does not believe its autonomous vehicle program will be successful before 2020.
- kkhire 11y ago
  I've heard directly from an Uber's exec himself that he does not feel safe getting into a driver-less car.
lordnacho 11y ago
A self-driving car would not necessarily be great for Uber. What is the taxi service currently providing? A way to order/pay for/sell a cab ride, and vetting so you don't feel uneasy with the driver. 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.
- sciguy77 11y ago
  I see what you mean. If I own a self-driving car I can pimp it out while I'm at work, cutting out Uber. And I thought Uber was pretty weak compared to YellowCab on driver vetting?
  - fweespeech 11y ago
    Yes but how would you pimp it out? ;) You'd put it in a marketplace with an app for people to order the rides...:P
- krschultz 11y ago
  However it would be a capital intensive business, and Uber has the capital. Uber also the brand, the customers, the data, and a bunch of robotics experts. They also seem to be really good at operations. 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.
- jameshart 11y ago
  If I'm leasing out my car and I'm not going to be in it, I'm going to care a lot more about passenger vetting than the passengers are going to care about vetting me.
butwhy 11y ago
Fun fact: if Tesla remained at the same manufacturing speed they're at today, it would take them 10 years to fill this order.
sidcool 11y ago
Isn't Google ahead of Tesla in self-driving cars?
- jonknee 11y ago
  By a wide margin, but Tesla actually makes cars.
bane 11y ago
Let's say this happens fast forwards to the future. 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.
- ryanmonroe 11y ago
  In this scenario, Uber should be able to maintain their own cars at a lower cost than individual car owners can, due to their scale. They would also probably be able to buy the cars for less to begin with. 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.
  - Retric 11y ago
    Your ignoring time value of money. Car depreciation is far from 1:1 with miles driven. 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.
  - jameshart 11y ago
    Isn't your last sentence also entirely true of Uber's current business model? 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.
jameshart 11y ago
Isn't the more natural play for uber to position themselves in the market for enabling early purchasers of self-driving cars to offset the cost by having their car go out and be a taxi when they're not driving it? 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.
- 6d6b73 11y ago
  >Uber got where they are - managing a massive fleet of vehicles 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.
  - jameshart 11y ago
    They 'manage' a massive fleet of vehicles in that I can ask uber to send me a vehicle, to my specifications, and they will do so. The clever part is that, yes, they don't own them. That was my point. Like, my entire point.
  - slayed0 11y ago
    Read the parent post again. I think you will find that you are actually in agreement with it. You're just using the word "manage" differently. (For the record I think your usage is more correct)
genericuser 11y ago
I think the change from drivers to driver less cars is a large enough one for people to accept and get used to, that it would make sense for uber to have their own small fleets of self driving cars in test cities, so that customers would get used to the self driving car concept in an environment where they could more directly provide feedback to the ones responsible for the car (uber in this case). It would also allow uber to work out issues that may arise from the change. I agree with others who say that this eventually leads to people having their own cars be taxis when not in use, I just consider the idea of uber managing their own small fleet a step towards that.
jegutman 11y ago
This article is so trolly. I don't mind the headline even, but it's literally a hearsay quote. That's just the tip of the iceberg: "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!
- Shivetya 11y ago
  likely Uber needed some favorable press and getting into a headline alongside Tesla was a cheap way of doing so, committing to a non existent product is about as cheap as you can get
onewaystreet 11y ago
I think this quote was meant to be taken as a bit sarcastic, in an "I'll eat my hat" kind of way. Uber recently poached a bunch of the top people from CMU's robotics department and has announced plans to lease a 53,000 square foot facility. They have no plans to wait for Tesla.
mariusz79 11y ago
Self-driving cars may be too expensive for one person to own soon after they are available.. It will take a lot of time and resources to build these machines to be safe and reliable, and companies will need to recuperate the costs in some way. On the other hand, most families will not need as many cars as they do now, so the demand will be lower than most people expect, which will raise the price. We can also expect companies to be the first users of self driving cars, as it will make more financial sense for them, so many suppliers will move to service businesses like Uber. Companies like Uber and Lyft will lobby lawmakers to make it harder for people to own self-driving cars, and effectively make it unaffordable to most. In short time Car-As-A-Service will become reality. In the name of safety and cost reduction, many roads will be closed to regular cars, effectively making it pointless to own a car. Source: Crystal Ball
- roel_v 11y ago
  Meh. Apparently retrofit kits will be $2000 two years after self driving cars are on the market (source: that company that drove one from la to ny a few months ago, forgot the name) so cost isn't going to be a biggie.
shenanigoat 11y ago
I think Uber will be disrupted/destroyed by something more driver friendly. They offer nothing that will keep a contractor loyal. All it would take is another 'app' that offers more autonomy and a larger share of the profits. Uber's 25% (is this correct?) take for a software infrastructure and brand is outrageous and probably causes a lot of resentment among drivers. Of course, we are talking about self-driving cars here so I'll just shut up. :D
jleyank 11y ago
Litigation risk. Uber now hides behind "just a contractor". Unless they don't actually own the cars, they're liable...
tzs 11y ago
I'm interested in a Tesla (or any electric car). I drive more than 100 miles from home maybe once a decade, so range is not a problem--I can just rent something with more range when I need it, if the electrical infrastructure isn't up to the journey. 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.

70 points by butwhy 11y ago

hooo 11y ago

I don't understand why they'd do this. My understanding is that the Tesla self-driving cars are not end-to-end autonomous like Google's. What benefit would they be to Uber in this case?

aetherson 11y ago
The whole article basically says that Travis says that he'll buy half a million Tesla cars in 2020 if Tesla can actually make the cars fully autonomous by then. Fully driverless cars are still not going to be a good thing for Uber.
- anthony_d 11y ago
  Why do you say fully driverless cars are not a good thing for Uber? Most of what I've read on the topic says otherwise.
  - toomuchtodo 11y ago
    Uber only has a lead as long as it has exclusive access to self driving cars. If anyone can buy them, there is zero barrier to entry.
    - anthony_d 11y ago
      They don't have exclusive access to cars currently and that doesn't seem to be a problem. There are a lot of people who won't buy cars if autonomous cars are available. 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.
  - evgen 11y ago
    Because there is no reason for the manufacturer to sell to Uber and Uber has no value proposition if driverless cars become real. If you are the builder of driverless cars why would you want Uber to dominate the market and be in a position to eventually dictate terms to you when you can instead sell at a premium to Uber's desperate competitors or just create your own car agency and laugh all the way to the bank as Uber becomes the next WebVan...
  - aetherson 11y ago
    There are a ton of reasons: 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.
    - anthony_d 11y ago
      That's just not convincing. 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.
      - aetherson 11y ago
        Dude, I don't know what to say. 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.
- ulfw 11y ago
  And why wouldn't Tesla just 'run' them themselves? Besides a little iPhone/Android booking app, what is Uber without the drivers?

smackfu 11y ago

Uber has been investing heavily themselves in self-driving cars. They know that Tesla won't have a product available to buy in 2020. 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."

fredkbloggs 11y ago
He also told him, seemingly apropos of nothing, that "if [his] grandmother had balls, she'd be [his] grandfather." Unfortunately the meaning of this exchange was apparently lost on the journalist.

ctdonath 11y ago

But...Uber's core competency is organizing drivers & vehicles without hiring/owning them. I'm leery of companies making dramatic change to their core; owning a fleet of a half-million vehicles is quite different from just telling them where to go.

yincrash 11y ago
Netflix's core competency was mailing DVDs.
- ctdonath 11y ago
  Netflix's original goal, AFAIK, was to provide streaming monthly-subscription video service. Mailing DVDs was a means to build that business when that core still wasn't technically possible. I doubt Uber's original goal was to outright own (with all the hassle & overhead thereof) a half-million vehicles.
- aetherson 11y ago
  And they went from having their business depend on having a physical inventory to a (more) purely software model. 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.
  - austenallred 11y ago
    > 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. So the craziest part of a self-driving, autonomous, on-demand taxi service is that someone had to buy a bunch of cars?

fredkbloggs 11y ago

Ah, the old valuation chestnut. There ought to be a journalism ethics rule prohibiting use of the word "valuation" with respect to previous transactions unless every such transaction was purely for common equity. The only idea sillier than that every (or any!) investor actually values Uber at $50b is that they can get their hands on $20b to buy 500,000 fully autonomous cars in 2020. No part of this assertion is sane, and no part will come to fruition. The cars Uber would need won't exist in 2020, and probably not in 2120 either. To the extent that someone does manage to build one, it won't be available for anything like $40,000, and it won't be built in any quantity. Uber itself may not even exist in 2020, and if it does it will likely be a shell of its former high-flying self, reined in by the same regulations its direct competitors all have to abide by. Utter rubbish.

nostrademons 11y ago
I'm curious - do you live in Silicon Valley? Because I see self-driving cars so often here that it's a non-event, and half the time, there's nobody touching the steering wheel. My former boss has ridden in one, and there were signups for an employee beta-test program before I left Google a year ago. I could easily believe that they will be in the hands of consumers by 2020, and I could believe they'll cost $40K once the sensors they need are in volume production. The technology's a lot more advanced than the handful of press articles make you believe.
- nkoren 11y ago
  > Because I see self-driving cars so often here that it's a non-event 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.
  - Diederich 11y ago

antidaily 11y ago

More proof that CEOs are grossly overpaid. Who needs that many cars? Just disgusting.

jegutman 11y ago
trolololo

bagels 11y ago

At $30,000 each, that's 15 billion in cost. That's a lot of money to raise for depreciating assets.

chrisper 11y ago
Pretty sure it would be leased. Also aren't depreciating assets "good" for taxes?
krschultz 11y ago
However that is pretty typical for industries other than software. Usually you need factories or raw materials or buildings or inventory. All of these things are expensive and depreciate. Software is the outlier.
jonknee 11y ago
They would finance the vehicles and pay for them with the revenue they produce. Rental cars are actually a pretty good case of this for conventional vehicles.

nugget 11y ago

I've said this before but it strikes me as under appreciated that Uber's main enterprise value is their network of drivers and their logistical expertise in managing and coordinating that network. Once self-driving cars become mainstream, wouldn't that start to erode the value of Uber's critical dominance in this area? A generation from now if I'm choosing between self-driving fleets of cabs from Uber, Lyft, Google, Facebook+Ford, and some Tesla joint venture, wouldn't prices suffer significant downward pressures? The best operators can still make a nice profit but nothing like the monopolistic profits Microsoft, Google, and Facebook extracted from OS, search, and social which seems to be required for a sustained multi hundred billion dollar valuation.

toomuchtodo 11y ago
Yes. Brands will have some value, but self driving rides are going to get commoditized very rapidly.
onion2k 11y ago
There'd still be a lot to differentiate on if you remove the driver - car quality (nicer/bigger/quieter cars), speed of journey (who has the best routing algorithm that uses the most real world sensors to route around problems), the most cars (so your wait is shorter), the most reliable network (plenty of redundant cars waiting if yours breaks down), the best app features, and so on. Removing the driver won't be the last innovation these companies do.
- nostrademons 11y ago
  Google has an advantage over Uber in all of those respects though - more capital, more experience building highly-available services, better routing algorithms, better contacts with carmakers, owns both the OS that the app will run on and the map data that they use to navigate, etc.
  - CyberDildonics 11y ago
    All of that pales in comparison to the fact that google has a direct line to more users. They can auto update their apps and allow people to book a driverless car.

segmondy 11y ago

Why shouldn't Tesla take their self-driving cars, make an app and "Uberify" it.

austenallred 11y ago
In a word, specialization. Worrying about self driving cars is probably enough of a challenge, but that's my best guess.
- segmondy 11y ago
  I don't think so. It will boil down to fleet management. Tesla is bypassing the middle man to sell cars directly. If we combine self driving cars and Uber, then most of us will not be buying cars and instead will be renting by usage. So why shouldn't Tesla bypass the middle man again and reap the profits?

deleted 11y ago

[deleted]

falsestprophet 11y ago

There is some real news here: Uber (probably) does not believe its autonomous vehicle program will be successful before 2020.

kkhire 11y ago
I've heard directly from an Uber's exec himself that he does not feel safe getting into a driver-less car.

lordnacho 11y ago

A self-driving car would not necessarily be great for Uber. What is the taxi service currently providing? A way to order/pay for/sell a cab ride, and vetting so you don't feel uneasy with the driver. 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.

sciguy77 11y ago
I see what you mean. If I own a self-driving car I can pimp it out while I'm at work, cutting out Uber. And I thought Uber was pretty weak compared to YellowCab on driver vetting?
- fweespeech 11y ago
  Yes but how would you pimp it out? ;) You'd put it in a marketplace with an app for people to order the rides...:P
krschultz 11y ago
However it would be a capital intensive business, and Uber has the capital. Uber also the brand, the customers, the data, and a bunch of robotics experts. They also seem to be really good at operations. 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.
jameshart 11y ago
If I'm leasing out my car and I'm not going to be in it, I'm going to care a lot more about passenger vetting than the passengers are going to care about vetting me.

butwhy 11y ago

Fun fact: if Tesla remained at the same manufacturing speed they're at today, it would take them 10 years to fill this order.

sidcool 11y ago

Isn't Google ahead of Tesla in self-driving cars?

jonknee 11y ago
By a wide margin, but Tesla actually makes cars.

bane 11y ago

Let's say this happens fast forwards to the future. 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.

ryanmonroe 11y ago
In this scenario, Uber should be able to maintain their own cars at a lower cost than individual car owners can, due to their scale. They would also probably be able to buy the cars for less to begin with. 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.
- Retric 11y ago
  Your ignoring time value of money. Car depreciation is far from 1:1 with miles driven. 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.
- jameshart 11y ago
  Isn't your last sentence also entirely true of Uber's current business model? 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.

jameshart 11y ago

Isn't the more natural play for uber to position themselves in the market for enabling early purchasers of self-driving cars to offset the cost by having their car go out and be a taxi when they're not driving it? 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.

6d6b73 11y ago
>Uber got where they are - managing a massive fleet of vehicles 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.
- jameshart 11y ago
  They 'manage' a massive fleet of vehicles in that I can ask uber to send me a vehicle, to my specifications, and they will do so. The clever part is that, yes, they don't own them. That was my point. Like, my entire point.
- slayed0 11y ago
  Read the parent post again. I think you will find that you are actually in agreement with it. You're just using the word "manage" differently. (For the record I think your usage is more correct)

genericuser 11y ago

I think the change from drivers to driver less cars is a large enough one for people to accept and get used to, that it would make sense for uber to have their own small fleets of self driving cars in test cities, so that customers would get used to the self driving car concept in an environment where they could more directly provide feedback to the ones responsible for the car (uber in this case). It would also allow uber to work out issues that may arise from the change. I agree with others who say that this eventually leads to people having their own cars be taxis when not in use, I just consider the idea of uber managing their own small fleet a step towards that.

jegutman 11y ago

This article is so trolly. I don't mind the headline even, but it's literally a hearsay quote. That's just the tip of the iceberg: "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!

Shivetya 11y ago
likely Uber needed some favorable press and getting into a headline alongside Tesla was a cheap way of doing so, committing to a non existent product is about as cheap as you can get

onewaystreet 11y ago

I think this quote was meant to be taken as a bit sarcastic, in an "I'll eat my hat" kind of way. Uber recently poached a bunch of the top people from CMU's robotics department and has announced plans to lease a 53,000 square foot facility. They have no plans to wait for Tesla.

mariusz79 11y ago

Self-driving cars may be too expensive for one person to own soon after they are available.. It will take a lot of time and resources to build these machines to be safe and reliable, and companies will need to recuperate the costs in some way. On the other hand, most families will not need as many cars as they do now, so the demand will be lower than most people expect, which will raise the price. We can also expect companies to be the first users of self driving cars, as it will make more financial sense for them, so many suppliers will move to service businesses like Uber. Companies like Uber and Lyft will lobby lawmakers to make it harder for people to own self-driving cars, and effectively make it unaffordable to most. In short time Car-As-A-Service will become reality. In the name of safety and cost reduction, many roads will be closed to regular cars, effectively making it pointless to own a car. Source: Crystal Ball

roel_v 11y ago
Meh. Apparently retrofit kits will be $2000 two years after self driving cars are on the market (source: that company that drove one from la to ny a few months ago, forgot the name) so cost isn't going to be a biggie.

shenanigoat 11y ago

I think Uber will be disrupted/destroyed by something more driver friendly. They offer nothing that will keep a contractor loyal. All it would take is another 'app' that offers more autonomy and a larger share of the profits. Uber's 25% (is this correct?) take for a software infrastructure and brand is outrageous and probably causes a lot of resentment among drivers. Of course, we are talking about self-driving cars here so I'll just shut up. :D

jleyank 11y ago

Litigation risk. Uber now hides behind "just a contractor". Unless they don't actually own the cars, they're liable...

tzs 11y ago

I'm interested in a Tesla (or any electric car). I drive more than 100 miles from home maybe once a decade, so range is not a problem--I can just rent something with more range when I need it, if the electrical infrastructure isn't up to the journey. 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.