In a few short years, Uber has taken the transportation industry by storm and by promoting efficiency, cost savings, and reliability; they have managed to remain one step ahead of the competition. Earlier this year, they made waves yet again with the introduction of Uber self driving cars. While the concept is limited to Pittsburgh, the experiment is proving to be worth the investment so far.
Uber’s company structure is reminiscent of a franchise, where a driver provides their own vehicle and auto insurance, and in return they receive the technology infrastructure through which riders are sourced, billed, and tracked. While this model has proven successful, Uber only captures 20% of the total fare and believes if they cut the drivers out of the equation, they can significantly increase their earnings by pocketing the remaining 80%. In addition, removing the drivers also mean less unpredictability on the road and therefore increases safety for all.
Of course, this is not without its challenges. First, these Uber self driving cars will be extremely expensive and will require a large capital outlay on the front end. Of course, with a rumored IPO in the works, capital is the last of Uber’s worries. However, even if the acquisition cost of these vehicles is achieved, the cost to maintain and service the entire fleet nationwide will be very high.
On the other hand, strategic partnerships with vehicle manufacturers may bring the initial total cost of the fleet down. GM has already invested $500 million into Lyft, and it is likely that one of the other big brands will strike a deal of a similar size with Uber soon.
After all, a partnership does make sense. A vehicle manufacturer could provide a purchase/maintenance subsidy to Uber in exchange for both a royalty and free advertising to the captive audience. If done properly, the Uber ride would give the brand an opportunity to showcase their latest vehicle, and the auto maker will potentially benefit from a future vehicle purchase from that rider.
Even if the cost issue is overcome, the biggest hurdle for Uber is simply that passengers feel more comfortable with a driver. In the short run, it will be tough to convince someone to get in a car without a driver because there is no longer a living, breathing, cognitive thinking human at the controls.
While the Pittsburgh experiment is currently using fully automated cars, they are still equipped with real drivers behind the wheel ready to take corrective action if something goes awry. Rides are currently free and surprisingly the response has been largely positive. The real test will come once Uber gets the green light to take the driver out of the seat and introduce a fully automated car, sans driver, to the platform. It can be expected that the response will be shaky at first, but anxiety will soon pass once the technology has proven itself, just as is the case with almost every disruptive piece of equipment that takes users outside of their comfort zone.
Whether a user feels comfortable in a driverless car is their choice, but the facts prove that fully automated vehicles remove uncertainty from the equation. Humans’ performance depends on many factors including sleep, mood, fatigue, and others, while computers deliver consistent results again and again. If programmed and properly maintained, there should never be an accident in a network of Uber self driving cars. In fact, almost every accident involving an automated vehicle that you may see on the news has been a result of another driver’s carelessness, not a breakdown in the technology.
Unfortunately, the biggest risk to technology is that it can be hacked by anyone with less than perfect intentions. Critics of automated travel are quick to advise that any network will always have vulnerabilities, and someone with enough motivation will be able to exploit these if given enough time. Cyber defenses can be placed around the network but will require constant updating and potentially limitless costs.
At the end of the day, the numbers will ultimately determine if Uber self driving cars are feasible. Uber is notoriously tight-lipped about their financials, but it can be expected that the cost savings over the traditional model will be lauded near and far if the Pittsburgh trials are a success. With a potential IPO of the company looming, investors are more anxious than ever to see if this idea can turn into reality, and more importantly, profits.
Whether this idea triumphs or fails, users can expect that Uber will remain on the cutting edge of technology and will continue pushing the envelope until it tears. Until that happens, just enjoy a ride in the back of an Accord with a driver named Steve making jokes all along the way.