Weekly News Review | 22 August 2016 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

Uber takes the lead, but for how long?

This week, Uber yet again pulled another card from its sleeve, announcing that the company would be the first to summon autonomous vehicles through the application; a product birthed from an 18 month ongoing partnership with Carnegie Mellon University and a handful of its best researchers. The ‘world dominating’ software specialist has been vocal of its desires to utilise autonomous vehicles in its operations and, with competition from companies like Google, it is now more important than ever to do so. Yes, of course Uber feels threatened by these powerhouses - who wouldn’t be? - so it has aimed to leapfrog rivals before becoming involved in a continuous game of catchup. In only a couple of years, thanks to partnerships and heavy investment, Uber has succeeded and is en route to a large slice of the emerging self-driving market. With Google still plodding along in California, Uber isn’t going to wait around for the future.

I believe that this aggressive expansion, although usually frowned upon, is the only way for Uber to stay ahead. Google will soon reach deeper into its war chest and set its sights on the predicted trillion - yes, trillion - dollar industry. If a powerhouse like Google manages to get autonomous vehicles on the road first, it can muscle Uber out of one country at a time, until it falls apart. With the stakes so high, Uber cannot afford to take its foot off the pedal.

On top of this, we forget that Uber is losing out on a chunk of profit by paying a human to drive customers around. Removing a driver will cut out the middle man and allow the company to have greater cost advantages and increase demand by lowering fares for customers. By lowering fares, Uber can break below the cost of vehicle ownership, meaning that no one will ever need to buy a vehicle. This would also have a detrimental effect on emerging carsharing services that a range of automakers have become so fond of, as there would be no point in borrowing a single car when you can jump in any autonomous taxi wherever and whenever you want. Customers want the easiest process possible.

It is hard to predict what will happen as Google and Uber lock horns, although there is one important fact: Both lack any mechanical knowledge or experience. Both companies realise this, which has led to joint-ventures between automakers who can provide the vehicles for their software. Uber has countered this problem by partnering with Volvo, exchanging knowledge from the automotive and technology industries, racing ahead of opposition. Volvo, who’s safety focus complements autonomous vehicles perfectly, can make serious money providing cars for Uber while providing the foundation for self-driving technology. So it seems that the key to success is pairing up with an automaker, completing the puzzle. However, let’s not rule out a collaboration between Uber and Google. Why should two powerhouses battle it out when they could partner and completely dominate the global market?

Alex Kreetzer

Alex Kreetzer - News Editor

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