What is Uber up to?
Uber (the ride sharing service) has been in the press repeatedly over the last few years as it battled the taxi industry in Australia and overseas. In many instances, Uber won hands down and completely disrupted that industry.
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Believe it or not, beating the taxi industry is just a small win within Uber’s grand plans.
What do we mean by this?
It is becoming clearer by the day that Uber wants to completely change the way cars are used. The company’s CEO, Travis Kalanick, has been quoted as saying Uber’s ultimate vision is:
“Smarter transportation with fewer cars and greater access”
Sounds innocent enough but this simple mission has the potential to revolutionise the entire car industry. There is no better proof of this than the recent revelation that Uber and Mercedes will be working very closely together.
What is happening with Mercedes and Uber?
Daimler (the parent company of Mercedes) and Uber recently announced plans to introduce and operate self-driving Mercedes cars on Uber’s ridesharing network in the coming years. Mercedes becomes the first car manufacturer to have this agreement.
No specific timetable has been released but given the rapid pace of improvement in Mercedes’ self-driving technology, the future is not too far off when your Uber might be a driverless Mercedes. The only thing that might prevent this from happening in the next few years is government legislation on autonomous cars but we are already seeing rapid legislative progress in a growing number of countries around the world.
Why are they starting this partnership?
To answer this question, let’s first understand how inefficient cars are.
We are not talking about fuel efficiency. We are referring to how often cars are used. In a developed market like the US, statistics show that on average cars are only used 5% of the time. For 95% of each day, cars are unused and simply parked somewhere. That makes cars one of the most underutilised but widely owned assets on earth.
Remember Uber’s vision of “smarter transportation with fewer cars and greater access”. The underutilisation of cars around the world is exactly what Uber’s ridesharing service is trying to solve.
Imagine a world where instead of owning your car, there are fleets of self-driving Mercedes cars that operate nearly 24 hours a day rather than being parked for 95% of the time. You order a car which arrives in minutes from your Uber app whenever you want, to take you wherever you want. All of this, for perhaps less cost and hassle compared to owning your own car.
How is this a perfect love affair between Uber and Mercedes?
Uber is on record saying it doesn’t want to build its own self-driving cars. Mercedes, with its technological leadership in autonomous vehicles provides a perfect fit. For Uber, an autonomous vehicle means no need to share any more revenues with a human driver.
From Mercedes’ perspective, it knows the combination of ridesharing services such as Uber and self-driving cars will lead to one natural outcome. Less people will buy their own cars. That is why it makes perfect sense for Mercedes to operate in the autonomous car-sharing industry since it may eventually cannibalise its traditional car manufacturing business in the long term.
What might the investment return be from investing in Uber or Mercedes right now?