Weekly Brief: Uber Back in Robo-Taxis as Doubts Haunt AV Gamble

Uber is back in the robo-taxi race.

The ride hailing giant announced plans last week to deploy robo-taxis across its ride hailing network in the US starting this year. Uber didn’t say where its rollout will start, only that it plans to scale deployment across the country over a 10-year period until driverless rides are available to its millions of customers.

The move fulfills a long-held dream to eliminate Uber’s single biggest expense: the wages that it pays to human drivers. However, Uber won’t use its own self-driving technology, which it spent hundreds of millions of dollars pursuing, only to abandon the pursuit when one of its driverless cars struck and killed a pedestrian in Tempe, Arizona, in 2018. That tragedy led Uber to sell its Advanced Technologies Group to Silicon Valley rival Aurora, which only agreed to buy the beleaguered group if Uber invested $400M of additional capital into Aurora. It was arguably the worst black eye in Uber’s checkered history.

Rather than go it alone, Uber now plans to roll out robo-taxis across its network through a 10-year agreement with Motional, a joint venture between automaker Hyundai and automotive supplier Aptiv and one of the most advanced driverless technology companies in the world not named Waymo or Cruise. Motional already has driverless pilots underway in a host of US cities, including San Diego, Boston, Pittsburgh and Las Vegas. Regular attendees of the Consumer Electronics Show will be familiar with Motional’s commercial robo-taxi service that has operated in Las Vegas in conjunction with Lyft since 2018.

The company has an existing relationship with Uber for autonomous food delivery through Uber Eats and is now positioned to become the first AV company to offer both delivery and ride-hail services within a major network. It’s new all-electric Hyundai Ioniq 5 robo-taxis will be available on UberX and Uber Comfort Electric in select markets starting in November or December. As part of the commercial partnership, Uber will share targeted insights to efficiently allocate and position Motional’s vehicles.

“This agreement will be instrumental to the wide scale adoption of robo-taxis,” said the company’s CEO Karl Iagnemma. “Motional now has unparalleled access to millions of riders and a roadmap to scale significantly over the next ten years. We’re proud to partner with Uber to bring both driverless ride-hail and deliveries to life in cities throughout the US.”

The move comes with risks. Uber can little afford another deadly robo-taxi accident, even if the technology belongs to another company. Cruise’s recent track record in San Francisco is a reminder that four years after the deadly accident in Tempe and two years after Uber sold its Advanced Technologies Group, self-driving cars continue to struggle with basic tasks and have investors and AV pioneers alike increasingly questioning if they are the worst investment that Silicon Valley has ever made.

On that note, AV company Mobileye, which is owned by Intel, has stopped testing its self-driving cars in New York City, 15 months after it secured permitting to become the first AV company to pilot its technology in the Big Apple. Mobileye claims that the split is amicable. I find that hard to believe given how hard it is for an AV company to find a foothold in a city. Once you grab one, you hold on with all your might and work to scale up, not scale back or abandon ship by your own volition.

The timing is particularly curious given the fact that Mobileye filed an S-1 last week in preparation to go public. The IPO is expected to be the largest of any IPO in 2022 and should net Intel far more than the $15.3Bn that it paid for the company five years ago. Then again, Mobileye’s business model as the main supplier of AV technology to legacy automakers is increasingly under duress, as carmakers develop their own in-house departments or invest in AV companies of their own.

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