The future of Uber is riding on self-driving cars, but the startup is warning investors now that it’s a risky business move. If rival companies are able to develop self-driving vehicles on a grand scale before Uber does, it could put everything from Uber’s ride-hailing service to its food delivery service at risk.
“We believe that autonomous vehicle technologies will enable a product that competes with the cost of personal vehicle ownership and usage, and represents the future of transportation,” said Uber is its recently filed S-1 paperwork to go public. “[The technology] will be an important part of our platform over the long term.”
Uber spent $457 million on tech initiatives in 2018 including its autonomous vehicle-focused Advanced Technologies Group (ATG). Uber hopes that self-driving car technology will allow the mega startup to develop a fleet of cheaper autonomous vehicles that won’t be dependent on human drivers that need to be paid wages.
But despite these major investments, Uber is still warning its investors that the long term plan could go awry. The company expects its competitors to be able to commercialize self-driving cars on a larger scale before Uber can.
“We have invested, and we expect to continue to invest, substantial amounts in autonomous vehicle technologies,” said Uber representatives. “As discussed elsewhere in this prospectus, we believe that autonomous vehicle technologies may have the ability to meaningfully impact the industries in which we compete.”
Uber says the company believes autonomous vehicles presents many opportunities. But that the development of AI technology is expensive, time-consuming, and may not be successful.
There were up to 8 million diesel passenger vehicles on U.S. roads in 2016, and there are 5.9 million commercial motor vehicle drivers operating in the U.S. today. Companies like Tesla are still trying to get drivers interested in electric vehicles on a grand scale.
Uber pointed out that several companies such as Waymo, Cruise Automation, Tesla, Apple, Zoox, Aptiv, May Mobility, Aurora, and Nuro are all in the race to conquer the self-driving vehicle market. If any of these rivals manage to scale up self-driving technology before Uber, the startup’s business as a whole could be at risk.
“In the event that our competitors bring autonomous vehicles to market before we do, or their technology is or is perceived to be superior to ours, they may be able to leverage such technology to compete more effectively with us, which would adversely impact our financial performance and our prospects,” said Uber.
But Uber isn’t just worried about its competitors. Self-driving vehicles are still considered experimental technology and external events such as currency market fluctuations, new tariffs, trade wars, or theft could prove to be problematic.
Up to 13% of the world’s steel is used in the automotive industry, and already steel prices have been affected by the Trump Administration’s steel tariffs . There’s no guarantee that Uber will be able to obtain adequate financing to support business growth in the self-driving arena.
Uber also cites the risk of backlash from Uber’s existing base of drivers. Protests in India, the UK, and the US, have taken place in the past and could happen again in the future with unpredictable consequences.
“Continued driver dissatisfaction may also result in a decline in our number of platform users, which would reduce our network liquidity, and which in turn may cause a further decline in platform usage,” said Uber representatives.
However, it isn’t just driver dissatisfaction that could lead to a decline in platform users. It’s also passenger dissatisfaction.
While companies like Uber, Waymo, Apple, and Tesla compete to commercialize a fleet of self-driving vehicles, the majority of U.S. drivers are still afraid of self-driving cars .
Approximately 63% of U.S. drivers say they’d feel afraid to ride in a fully self-driving vehicle and only 13% of U.S. drivers say they would feel safe sharing the road with a self-driving car. There are already approximately 6 million car accidents in the U.S. each year, the fear is non-human drivers could increase those numbers It’s those numbers, too, that investors may want to consider.