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Uber Stops Self-Driving Car Pilot In San Francisco After The DMV Steps In (engadget.com)
93 Escort Wagon writes: San Francisco bicyclists can breathe a sigh of relief now that Uber has suspended testing of its autonomous fleet in the city. The company announced the decision after the California Department of Motor Vehicles suspended the registration of the vehicles involved in the testing. Uber remains "100 percent committed to California and will be redoubling our efforts to develop workable statewide rules," the company said. A spokesperson for Uber told Recode, "We are open to having the conversation about applying for a permit, but Uber does not have plans to do so."
Uber getting involved in autonomous cars makes absolutely zero business sense.
In a traditional business sense, of course it makes no sense. But that doesn't apply here. Uber is in a competitive industry with few barriers to entry, and very little profit, yet they have a market cap of $50B. How can they possibly justify that valuation to their investors? The only way is to convince them that there is something more: That self-driving cars are going to revolutionize transportation, and that Uber is going to play a major role in that, with plenty of profit for everyone.
From a publicity point of view, their defiance of the California DMV was pure genius. Uber got way more news coverage in California than they did for their earlier fully legal SDC rollout in Pennsylvania. They need to be perceived as a gutsy company aggressively pursuing new tech. They achieved that.
In a traditional business sense, of course it makes no sense. But that doesn't apply here.
Sure it does. The laws of economics are not suspended for the benefit of Uber.
Uber is in a competitive industry with few barriers to entry, and very little profit, yet they have a market cap of $50B. How can they possibly justify that valuation to their investors?
Uber is not a publicly traded company so they do not have a market cap in the conventional sense. Their valuation is based on an extrapolation from the percentage of the company purchased by investors and the price of that investment. If you buy 10% of a company for an investment of $5B then the company is valued at $50B. That doesn't mean that it actually would be worth that amount on the open market and it certainly doesn't mean they are actually worth $50B. It means the most recent investor felt it was worth that but it is dangerous to extrapolate that too far.
You think there are few barriers to entry in their industry? I disagree. There are some pretty substantial network effects in play here. There are only so many drivers and cars to go around and they are going to tend to gravitate towards the company which is most likely to have the biggest user base. Sure, users can in theory switch easily but what good is switching to a taxi service that doesn't have any drivers? Scale will matter here which is why Uber is trying to grow as fast as possible. Uber has something like the same advantage eBay has. The buyers and sellers will tend to gravitate to the largest platform. Frankly the self driving car thing is nothing but a pointless distraction from building their network as far as I can tell.
From a publicity point of view, their defiance of the California DMV was pure genius.
Perhaps but I think you'd have a hard time showing a causal relationship between that and Uber's bottom line.
They need to be perceived as a gutsy company aggressively pursuing new tech.
No they do not. They WANT to be perceived that way (for reasons that aren't entirely clear) but wants and needs are different things.
Actually, i think automated vehciles make it even more clear that Uber is not a taxi service. Its a car rental agency. You are renting a car for a very short period of time, charged by both time and mile. Like some existing rental agencies they will pick you up where you are, except the car doesn't need a person to do that... or to return itself once you are dropped off.
Their only real asset is the software that handles pickups and drop offs and the code that handles surge pricing. All that works with an automated car service just as well as it does with their current service.
They would have no employees to pay either which should more than cover the cost of maintaining and even paying for the vehicles. The real issue is how to deal with capacity, having enough automated cars on hand to handle rush hour and what to do with them when you don't need as many cars on the road.
That said, I see no reason why they would want to develop these cars themselves, why not let someone else do the heavy technical lifting and just buy the cars when they hit the market?
"In America, first you get the sugar, then you get the power, then you get the women..." -H. Simpson
Thing is, I don't think they _can_ lower the rates... I think the human drivers are already giving their vehicle depreciation away for less than complete compensation, and their time spent driving for free. People constantly comment on "how nice their Uber car was" - because it is new, and depreciating rapidly.
There's are many reasons why taxis are old, and smelly. 1) it's a commodity business with little consumer choice - almost nobody turns away the first taxi at the stand because it's older than the next one. 2) maintaining an old vehicle with 200K+ miles on it is less expensive than buying a new one, especially when you own the repair depot.
Miles put on old vehicles are much less expensive than miles put on newer cars.