In 2020, Uber was at a crossroads: The company had made an expensive bet on robot taxis, but the project was laden with legal problems and burning through cash. So Uber gave it away to another start-up.
But five years later, Uber’s future seems as tied to autonomous vehicles as ever. The company is now betting that it can embrace driverless taxis without spending money to build them — at the risk of being overtaken by the companies that do.
In recent months, Uber has doubled down on what it calls its “platform strategy,” teaming up with robot taxi companies like Waymo. In Phoenix, riders can order a Waymo car through the Uber app, and in Austin, Texas, Waymo’s robot taxis will soon don the Uber logo. The ride-hailing giant now has 15 autonomous vehicle partnerships, from Waymo to international companies like WeRide and autonomous food delivery services like Avride.
But those partners are also competitors. In December, when Waymo said it was expanding into Miami without an Uber partnership, Uber’s stock tumbled 9 percent. And Waymo’s expansion is far from over: Last month, the company announced that it would test its vehicles in 10 new cities this year.
Tesla’s chief executive, Elon Musk, said last week that his company would have self-driving taxis on the roads of Austin in June. He had made similar predictions for years about when Tesla vehicles would be able to drive themselves, but industry insiders say it is most likely only a matter of time before his company makes good on his promise.
For Uber, the question is whether it will ride on or get run over by the driverless taxi expansion. “No one is exactly sure who’s going to be the winning technology,” said Tom White, a senior research analyst with the financial firm D.A. Davidson. “So everyone is keeping their potential enemies close.”
On Wednesday morning, Uber said that in its most recent quarter, its gross bookings, an important measure of the company’s business, grew 18 percent from a year earlier, which was higher than Wall Street investors had expected. Uber’s revenue increased 20 percent to $12 billion, also higher than Wall Street expectations. Uber also beat expectations for net income thanks to $7 billion in tax benefits.
Wall Street analysts asked Uber executives about its vision for the robot taxi market in a phone conference on Wednesday morning.
“The first markets that are going to be penetrated are going to depend on regulation,” Dara Khosrowshahi, Uber’s chief executive, said. “I think in the next five years, the addressable market is going to be probably in the order of 10 to 15 percent of the overall marketplace.”
In the 2010s, the hype around autonomous vehicles “probably ran ahead of the technology,” Andrew Macdonald, Uber’s senior vice president of mobility, said in an interview. “Now that’s starting to flip.”
It is hard to tell if Waymo has cut into Uber’s business, including in cities like San Francisco, where Waymo’s cars can fairly be described as a mainstream transportation option. (Mr. Khosrowshahi has said robot taxis have not affected demand for Ubers.)
Lyft, Uber’s top rival, has taken a similar approach to robot taxis, announcing three autonomous partnerships of its own since November, with more in the works.
The value of robot taxis to Uber and Lyft is clear: Human labor is one of their largest costs. The companies also envision a future when people will buy robot taxis to use as personal vehicles and, in off hours, rent them to ride-hailing networks, said Jeremy Bird, Lyft’s head of driver experience.
But for now, robot taxis are more costly than they are profitable and require an enormous amount of capital to develop. After General Motors, the owner of Cruise, bowed out of the robot taxi competition in December, the club of companies funding the race for autonomy essentially shrank to two: Alphabet, the parent company of Waymo and Google, and Amazon, the parent of Zoox.
In Phoenix, riders can order a Waymo through Uber’s app, an arrangement coming soon to Atlanta and Austin. In those two cities, Uber will also provide fleet management services like cleaning and charging. The company takes a portion of the revenue from each ride, likely between 10 and 20 percent, according to analyst estimates. (Mr. Macdonald declined to provide financial details of the partnership but said they would evolve over time.)
The increased supply of vehicles on the Uber and Lyft apps also shortens waits and lowers costs for riders. And both companies already operate fleet management businesses, so taking over those services for a partner like Waymo is convenient, Mr. Macdonald and Mr. Bird said.
For consumers, having robot taxi rides on an app like Uber or Lyft is a draw in itself. “That’s the biggest benefit for us,” Mr. Bird said. “Just diversifying the types of options that riders have on the platform.”
But the value of an Uber partnership for Waymo becomes less clear in a city like San Francisco, where the demand for Waymos already exceeds the supply.
Melissa Covarrubias, a lawyer in Phoenix, now exclusively takes Waymo as a ride-hailing option, feeling safer and more comfortable after negative experiences with Uber and Lyft drivers, she said.
“And the interior of the Waymo is so nice and luxurious, and you can select your own music,” she added.
Sean Campbell, also a lawyer in Phoenix, said Waymo had become his ride-hailing choice around 35 percent of the time, especially when going to work. But he uses Lyft to get to events like sports games or concerts, where Waymo would have to navigate large crowds.
“But for a night out, I always take Waymo,” Mr. Campbell said. “The thing with Waymo, beyond the technology: It’s just fun.”
Uber’s relationship with Google, before Waymo was spun off, had tumultuous beginnings. In 2016, Anthony Levandowski, a top Google engineer, left the company and later became an executive at Uber. In 2020, he was convicted of stealing Google’s trade secrets, among other legal disputes between the two companies.
But Mr. Khosrowshahi, who took over as Uber’s chief executive 2017, mended the relationship. In 2020, he handed off Uber’s autonomous research division to the start-up Aurora, which Uber then invested $400 million in.
“First we had to make peace with them and settle in court, et cetera,” Mr. Khosrowshahi told The New York Times on a recent podcast. He added, “And then over a period of time, we built relationships.”
In response to questions about its partnership with Uber, a Waymo spokesman provided a statement from the company’s blog post announcing the expansion to Atlanta and Austin.
Uber’s earnings calls have become a regular forum for analysts to pepper Mr. Khosrowshahi with questions about his autonomous strategy. While most analysts believe the company is on a promising track with its partnerships, the robot taxis present a big “risk or opportunity for Uber,” said Nikhil Devnani, an analyst at Bernstein. “I think the market is still trying to figure out which outcome it’s going to be.”