Last week we noted Uber's intention to launch "semi-autonomous" taxis in Pittsburgh (see "Uber Determines Pittsburgh Lives Most Expendable; Plans To Unleash Autonomous Vehicles There Within Weeks"). For now, the Uber cars will still have an engineer in the driver's seat ready to grab the wheels at anytime as they continue to work out "bugs" like the inability to cross bridges with one engineer noting that "bridges are really hard."
Now, nuTonomy's "semi-autonomous" vehicles are hitting the streets in Singapore. The company has invited a select group of people to use the service during this initial "test phase" and expects to launch full service by 2018. Per an interview with Reuters, nuTonomy executive Doug Parker sees autonomous vehicles changing "how cities are built, how we really look at our surroundings." Unlike Uber which partnered with Volvo, nuTonomy rides will be conducted in the stylish Mitsubishi i-MiEv electric vehicle.
As we pointed out in a post last week, to the extent the technology works consistently, avoiding the nasty consequences of death and mayhem in the event of failure, autonomous vehicles are worth big money to taxi services and consumers…though not so much for the automotive OEMs (see "Ford Announces Plans To Self-Destruct Starting In 2021"). As we pointed out, the cost of paying drivers is a substantial portion of the ~$1.00 per mile charge paid by taxi riders. To the extent that cost can be removed from the equation then fares charged by companies like Uber and nuTonomy will decline materially. The auto OEMs, on the other hand, could suffer as truly autonomous cars could result in substantial increases in passenger car utilization rates and, therefore, declines in annual car sales.
That said, as Bloomberg pointed out this morning, developing autonomous vehicles is not cheap as Uber is now expected to have lost $1.3BN in 1H16. Moreover, Uber's losses seem to be growing as they are expected to have posted EBITDA of $(520)mm in 1Q 2016 and $(750)mm in 2Q 2016. EBITDA for Uber's U.S. operations also turned negative in 2Q at $(100)mm after they were expected to have been profitable in the U.S. in Q1. NYU Professor, Aswath Damodaran, for one, is astounded by how much money Uber has been able to lose, saying:
"You won't find too many technology companies that could lose this much money, this quickly. For a private business to raise as much capital as Uber has been able to is unprecedented."
As Bloomberg pointed out, the amount of cash being burned by Uber is fairly unprecedented, even in the tech world. Even Amazon's largest loss was $1.4BN back in 2000 and Uber is eclipsing that by a large margin. In total, Uber has raised $16BN in equity and debt and is valued at $69BN. Hey, no one ever "disrupted" a market without losing a few billion first.
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