While we await the report from the NTSB and other regulators investigating the fatal Uber crash and consider whether the Governor of Arizona may have seen an early version of the report in making his announcement this morning concerning Uber's "unquestionable failure", what other factors at Uber might have contributed to this fatality? (Or as the video supplied by Glaucus yesterday states, the "perfect storm" suffered by Uber). And whether these factors added such intense pressure on Uber to "win at all costs" the race to creating the most successful AV unit that it severely cut safety corners? Can it ever rebuild trust in AVs on its own now?
There is an Op Ed in the NY Times today that I believe is controversial but raises a few interesting statistics about Uber's current business model that might be considered in answering the question about other factors that influenced events leading to the Uber AV fatal crash.
https://www.nytimes.com/2018/03/26/...-left-region&WT.nav=opinion-c-col-left-region
As it is behind a paywall and a subscription is needed, I provide a few quotes that I found interesting and others might too.
1. "Uber’s business model: Its modus operandi is to subsidize fares and flood streets with its cars to achieve a transportation monopoly. In city after city, this has led to huge increases in traffic congestion, increased carbon emissions and the undermining of public transportation."
2. "Most customers who love Uber don’t realize that the company subsidizes the cost of many rides. This is likely a major factor in Uber’s annual losses surging
from 2.8 billion in 2016 to $4.5 billion in 2017. This seemingly nonsensical approach is actually Uber’s effort to use its deep pockets to mount a predatory price war and shut out the competition. That competition is not only taxis and other ride-sharing companies, but public transportation."
3. "Ridership on public transportation is down in nearly every major American city, including
New York City (which recorded
its first ridership dip since 2009). This is hurting the revenue that public transportation needs to sustain itself. Uber passengers and public transportation users alike now find themselves stuck in heavy traffic for far longer because of what’s been called “Uber congestion.” In Manhattan, there are
five times as many ridesharing vehicles as yellow taxis, which has caused average speeds to decline by
15 percent compared with 2010, before Uber."
4. "The company’s new leadership continues to deny that it is contributing to these ill effects. Mr. Khosrowshahi even insists that Uber
can help solve congestion by adding a small number of electric cars, and that it could start using flying taxis in five to 10 years (which is preposterous — Uber doesn’t even have a prototype)."
The remaining parts of the Op Ed digress into issues such as regulations requiring a fee for hire to address congestion, prohibiting Uber from fare subsidies, better driver background checks, etc, which while interesting and controversial, do not directly relate to the potential pressure points on Uber in its race to reach AV independence. I do wonder what regulators in London and Newcastle, who are reviewing Uber's license, think of some of these issues?
A loss making business model that exists at Uber creates pressure on them to change the model. The cost of the driver adds pressure on Uber's margins and eliminating the driver could turn the loss into a profit. With its AV fleet now grounded indefinitely, the competition will gain further ground on Uber. Will the indefinite grounding lead Uber's new CEO, who was originally dubious of continuing Uber's self drive efforts, call a halt to their programme entirely? Keep in mind that Uber has invested in significant numbers of AVs on the road already, has a staff of 400 people in their Arizona self drive unit, has staff and operations in other US cities including Pittsburgh and Boston and has placed an order a few months ago to purchase 24,000 specially built (for self drive) Volvos for delivery starting early next year. How much of the $ 70 billion private market valuation for Uber is based on them "winning" the race to autonomous vehicles? How has Uber's desire to launch an IPO next year been affected by the crash?
The new Uber CEO has the unenviable task of assessing whether their Uber self drive programme has been irreparably damaged and can no longer survive as a stand-alone effort. As I have suggested previously, would it not make sense for them to consider a partnership with Waymo, a substantial Uber shareholder, putting Waymo's "driver" in all future Uber self driving vehicles? Negotiations might have already begun as Uber's CEO had already hinted at such a possibility before the fatal Uber accident. With Japan's Softbank now one of Uber's largest shareholders will they add pressure on Uber to enter into such a partnership (they recently arranged the deal announced between Grab and Uber to combine rather than compete in many South East Asian markets after Uber had spent nearly $700 million to create its presence in these markets)? Waymo already has a non-exclusive agreement with Lyft, the number 2 player in the US ride hailing market and has led several rounds of financing for Lyft. Bringing Waymo's "driver" into a partneship with Uber will require negotiations over data sharing, mapping, profit sharing, etc.
One of the more intriguing profit opportunities with a self driving vehicle (esp for Uber with or without a partner like Waymo) will be the opportunity to "sell services" when fleets of cars are connected. With 4G and soon 5G connectivity, and with the vast majority of cars on the road still "unconnected", car manufacturers and fleet owners see the ability to sell services from a platform they create in their vehicles at high margins to interested parties. What services might a manufacturer or fleet owner charge for? Would a transport company or online retailer be interested in shipping on board connected, secure vehicles that operate 24/7 where there is considerable unused space (often hundreds of cubic metres of unused space)? Would a local government or retailer be interested in accessing a crowd-sourced HD map maintained by a network or fleet of vehicles? What would they be prepared to pay for such data? Surely a profitable service could be built around such demand.
Will Uber's CEO make some major strategic decisions soon?
Comments?
