27 Aug 18

Uber backs away from Autonomous Driving

The 'trough of disillusionment' is that phase of the so-called hype cycle where initial enthusiasm about innovation mutates into pessimism about the pace of progress. As indicated by Uber's strategy shift, Autonomous Driving may be hitting that trough just about now.

Self-driving technology is the next wave of mobility innovation, just behind ride-hailing. And it will take over the world just as fast. In fact, both trends will reinforce each other and merge, so pretty soon our cities will be crawling with 'robo-taxis'. 

Deadly accidents
In a nutshell, that was the thinking among ambitious mobility innovators and disruptors – at least, until recently. So, what's changed? The answer, ironically, could be: not enough. 

On the one hand, the progress of self-driving tech has not gone as fast as expected and has even slowed down due to a number of deadly accidents, which have paused development. In March, an Uber vehicle in autonomous mode struck and killed a woman crossing the street in Tempe, Arizona – the first fatal accident involving an autonomous vehicle and a pedestrian. 

The company immediately suspended all its self-drive pilots, only resuming them in mid-July. And at the end of July, Uber stopped work on Otto, its self-driving truck project. Back in October 2016, Otto had completed the first delivery by autonomous truck, over a 120-mile trajectory. Despite that world first, Uber has now judged further progress on self-driving trucks too costly to pursue. 

€3.6 billion

The other side of the equation has run into trouble too: ride-hailing has, as yet, not turned into the profitable business that its promoters have been promising for years. Giants like Uber and Lyft remain paper tigers that have yet to make a single dollar in profit. In fact, Uber's losses last year - €3.6 billion – were up 61% over 2016, when the company 'only' came €2.2 billion short. 

Uber is not the only company now re-assessing its projections on Autonomous Driving. But its size and reputation as a thought leader could drastically change the mobility industry's expectations of self-driving technology. Under its founder Travis Kalanick, Uber was driven by a two-step strategy for the future. One: rapid expansion of ride-hailing, two: conversion of its fleet to self-driving vehicles. That vision kept venture capital flowing in, subsidising both Uber's rapid expansion and expensive research into Autonomous Driving.

Upcoming IPO

However, Dara Khosrowshahi (pictured), who took over as Uber's CEO in August 2017, is pushing another strategy: ride-hailing not as the self-driven answer to all mobility issues, but as part of a multimodal approach to mobility. Not only is this a more realistic strategy that better reflects market realities, it also repositions Uber for an upcoming IPO. 

With an estimated worth of around $68 billion, Uber is the world's most valuable private startup. Upon taking the CEO role, Khosrowshahi stated he wants to take Uber public “within the next 18 to 36 months”. But before he's able to do so, he will have to drastically reduce the company's losses. This will involve a combination of cutbacks in expensive research (such as Autonomous Driving), and rollbacks from 'difficult' markets (Uber has already withdrawn from China and Eastern Europe).

Public transport

It seems that under Khosrowshahi's direction, Uber has finally realised that new technology doesn't automatically come with its own business model. That assumption was born out of the example of the iPhone, which rapidly and radically changed how we communicate and consume. 

But that doesn't mean that electric, autonomous and/or shared mobility will do the same: none of them offers as much advantage over existing technologies to transform consumer behaviour as totally as smart phones have. So Uber now seems determined to offer consumers choice, rather than just one vision of the future.  

There's plenty of evidence for Uber's post-Kalanick makeover. In April, Uber acquired Jump Bikes, which offers shared electric bicycles in 40 American cities. The company now also offers other mobility alternatives on its platform, including public transport. It may soon include vehicles from other providers. There are even persistent rumours that Uber selling its Autonomous Driving department.

“Amazon of mobility”
It could well be that Uber is now moving to become, as analyst Edward Niedermeyer calls it, “the Amazon of mobility”: instead of a global monolith that just offers robo-taxis, a platform that provides consumers with genuine choice of various, different mobility modes. In a way, that's a more radical vision than the company's previous one, which would just have replaced the century-old monopoly of individually-owned, individually-driven cars by a new one, centred on shared, self-driving cars. 

In this vision, research into Autonomous Driving will not stop, but the technology will become a less dominant, less disruptive part of the mobility future. And that future will be more diverse – and more exciting – than previously imagined. 

One example is one of Uber's most recent endeavours: collaborating with Airbus, Boeing, Toyota, Japan Airlines and others on a scheme sponsored by the Japanese government to bring flying cars into regular service within a decade. Over the next five years, Uber will invest €20 million in developing flying-car services in Paris, aiming to start commercial operations in 2023.

© École polytechnique (J.Barande), CC BY-SA 2.0

Authored by: Frank Jacobs