Uber is hatching a plan to eventually eliminate the human driver component from its ride-hailing services with self-driving cars which would be operational “in the coming years.”
Partnering Mercedes-Benz parent company, Daimler, Uber has announced the both companies will be working together on future self-driving cars so that automated Mercedes-Benz vehicles will be added to the Uber platform.
In a statement announcing the partnership, Uber’s CEO Travis Kalanick, didn’t however give a timeframe. He said;
“By opening up the Uber platform to Daimler, we can get to the future faster than going it alone. It’s a future in which our cities and roads will be safer, cleaner and more accessible, and we couldn’t be more excited about what’s next.
“Auto manufacturers like Daimler are crucial to our strategy because Uber has no experience making cars – and in fact, making cars is really hard. This became very clear to me after I visited an auto manufacturing plant and saw how much effort goes into designing, testing and building cars.”
This will mark the first time that an automaker effectively becomes an Uber “driver.” Already, the company has launched self-driving cars experiment in various U.S. cities.
Uber has been one of the most aggressive companies in trying to develop self-driving cars, envisioning the time when driverless cars prowl the streets of major cities picking up and dropping off passengers.
With the Daimler deal, Uber has not given up on developing its own automated driving technology. The deal with Volvo that was announced last August to develop custom vehicles for the service based on the Swedish brand’s platform architecture also remains in place.
The new deal represents a hedging of its bets by allowing an automaker to operate its own fleet of automated vehicles just as if it were an individual driver. Mercedes-Benz will retain ownership of vehicles that it develops and operate them using Uber’s dispatch platform to connect riders with its vehicles. Daimler and Uber haven’t revealed the financial details of the deal, but the revenue split will presumably be different from that offered to individual drivers.
Mercedes-Benz has shown off self-driving tech at auto shows and the Consumer Electronics Show, a trade show, in Las Vegas.
In Paris last year, Mercedes-Benz showed the Generation EQ concept. The all-electric SUV is powered by twin electric motors, and appears to be configurable for the hardware to accommodate autonomous driving.
Uber is by far the leader in ride-hailing in most of the markets it participates in. Despite its commanding market position, privately-held Uber is estimated to have lost more than $3 billion in 2016.
The company’s biggest expense is believed to be the money it pays out to drivers which is a big part of why it wants to automate the driving process. However, Uber and other ride-hailing providers currently don’t have to purchase any of the vehicles used by its independent contractor drivers. These companies also don’t have expenses such as insurance or maintenance on vehicles.
As of October 2015, Uber had more than 327,000 in the U.S. alone, a number that has grown significantly since then. If Uber, Lyft and others had to purchase vehicles and operate them, they would likely be spending tens of billions of dollars per year on additional capital expenses. As Uber discovered in December, when it attempted to start testing its automated Volvos in San Francisco, it would be facing a great deal more regulatory scrutiny as well potential liability.
Confirming that the company is open to allowing other automakers to also operate their own automated vehicles on its platform, Uber spokeswoman Momo Zhou said the OEM programs are not white label efforts and will be available to riders directly through the standard Uber mobile app.