General Motors has already made it clear that it plans to launch an autonomous taxi service in San Francisco before the end of the 2019. While the system will likely be very limited in size and scale at first, it will very likely operate like Uber or Lyft, with passengers using an app to order rides that are priced based on trip distance.
But just as GM and the rest of the automotive industry is getting on in the mobility sector, investors are beginning to have their doubts about its long-term viability. According to Reuters, Uber posted a net loss of around $1 billion in the first quarter of 2019 on sales of about $3 billion, causing analysts to call the into question the business model of app-based ride-sharing services.
“When it comes to Uber, we believe there are still questions over the current car-sharing model, the economics of which are not immediately or obviously attractive for sustainable, long-term investment,” Mark Hargraves, head of a global equities firm, told Reuters.
Uber rival Lyft, which GM retains a 7% stake in following its IPO last month, has also staggered in recent months. Stock in the ride sharing app is currently trading at just over $56 a share, down significantly from is IPO price of $72. GM’s investment still seems to have been a smart one, however. It initially invested $500 million in Lyft and its current stake is believed to be worth over $1 billion.
Uber’s is seeking for a stock price range of $44 to $55 for its coming IPO and a large valuation of $91.5 billion – compared to Lyft’s IPO valuation of $24.5 billion. Reuters says investors will be critical of Uber’s lack of profitability ahead of the IPO and will be curious to see how the company will deal with the predicted shift to autonomous cars.
Automakers like GM and Ford are keen to launch an autonomous ride sharing service, as the majority of money that companies like Uber and Lyft make goes to drivers. Looming minimum wage increases also stand to take an even bigger bite out of ride-sharing companies’ profits.
Self driving taxis may not be the short-term answer, however. With the technology still in its infancy, autonomous vehicle companies still rely on vehicle operators to be present in AVs, so launching a self driving taxi service without an operator could be seen as irresponsible. Waymo, which already operates a self driving taxi service for a very limited number of beta testers in Arizona, still has human safety drivers in its vehicles.
Cruise CEO, Kyle Vogt, told Reuters in an interview last year that the company is still on track to launch its own self driving taxi service in 2019.