As GM Readies Self Driving Taxi Service, Uber Posts $1B Loss
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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.
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General Motors has yet to demonstrate it has the technical skills to integrate any autonomous function into a production vehicle which means fully autonomous self-driving taxis are still a minimum of 5 years away which demonstrates the poor leadership by GM CEO Mary Barra.
Wrong!!! Just because you have not seem it doesn’t mean it doesn’t exist. It said GM will start small in the beginning.
You’re right. If GM cannot even get something as basic as an interior right, how can we expect them to get his right? IMHO, the sooner this venture fails the better. That way GM can get back in the business of building world-class cars and trucks instead of this crap that very few want.
both company’s replace city buses. Bus’s & their drivers & Uber, Lyft Co.’s just add to what Taxi’s do!
A billion-dollar loss on the eve of the Uber IPO is sure to discourage a few potential IPO investors. However, to those that do invest, some appeal will be due to the IPO predicting a TAM (total addressable market) of $6.2 trillion per year for 13 trillion miles of travel. If Uber did eventually get 50% of this market it could be worth something like $5 trillion which is a value several times more than any of the World’s biggest companies now.
To do that 13 trillion miles of travel now would cost of about $13 trillion, since presently, the all-up cost of travel is roughly $1 per mile. So, the Uber IPO TAM shows that car travel should get much less expensive for everyone. The saving will be about 50%.
The only way Uber will provide the public with these substantial travel cost reductions is by having fleets of autonomous vehicles (AVs) which, more specifically, are likely to be autonomous electric vehicles (AEV) working as taxis.
Waymo, Tesla and GM say that within 12 months they will be operating AV taxis or at least something similar. How functional they will be is another matter. It is too much to expect them to be fully functional and permitted to operate city wide in various cities. Nevertheless, AV, EV and AI technologies appear to be progressing sufficiently fast so that by about 2024 or sooner AEV taxis will dominate taxi travel.
When AEV taxis come to dominate taxi travel, expect the handsome financial rewards to cause intense competition to grow World AEV taxi numbers by as much 20 million per year. Except, perhaps for battery raw materials, there appears to be no substantial supply constrains to prevent this rate of taxi manufacture.
A typical AEV taxi should collect about 150,000 miles of fares per year. Consequently, 13 trillion miles per year of fares will require roughly 100 million taxis. It appears that it is possible for the World to have this many AEV taxis by 2030. Will half of them be Uber?
Uber’s IPO estimate of 13 trillion miles per year for mobility as a service (MaaS) appears reasonable. Receiving $6 trillion in fares for the 13 trillion miles seems optimistic.
One thing to remember is the tax factor. If electric cars garner even 10 percent of the market, states and municipalities will find a way to tax these drones on a per-mile basis driving up the cost of each ride.
Reason for driverless cars is technology companies are useless and can only find ways if putting people out of work. GM is stupid to invest in a service that will not work on snow, sleet and rain environments. GPS is BS and not reliable streets are to tight. UBER sucks as a company as does LYFT by paying the driver peanuts because drive share is a poor investment. No drivers no money hence the scummy Saudi Arabians allow women to drive in 2018 because of the lack of driver for UBER that they own. Hopefully UBER LYFT go to of business and people can start earning livable wages…
Please forgive me if I get more excited about a Ford Bronco or a Jeep Grand Wagoneer than I am about a low-selling GM EV with a trim panel in place of driver controls and add-ons that look like an afterthought. If this is trying to impress Wall Street and the general public, Machete Mary has a lot more work to do.