A Bet on Uber Is a Bet on Self-Driving

By Aarian Marshall | May 10 2019

On Friday morning, Uber executives rang the opening bell of the New York Stock Exchange as their 10-year-old, $82 billion company went public. The IPO is significant, even in a year chock-full of important IPOs: It's the largest by a tech company in the past half decade and the second by a ride-hailing company in the past two months. Uber shares began trading at $42 and were trading close to the $45 offering price by early afternoon.

But the most important activity Friday for Uber’s future may happen 370 miles away, in Pittsburgh, headquarters of the company’s Advanced Technologies Group. If Friday is like any other for ATG, autonomous vehicle safety drivers will pilot a handful of sensor-laden SUVs on short test trips around the city’s Strip District. They will collect data on road situations and probably run through a few trials conceived by the company’s engineers to ensure their software is working properly.

If it works, that self-driving technology might finally lead the ride-hailing company to the kind of profitability its investors—who have sunk more than $22 billion into Uber already—would like to see. At least some day.

“I’m not sure [automated vehicle tech] is necessary for ride-hail companies to get to profitability, but it does feel like once they’re able to achieve that, then they have an opportunity to be wildly profitable,” says Barrett Daniels, a partner in the national IPO practice at Deloitte. Investors may need to be patient; Uber’s operating loss last year topped $3 billion. “The question is, does that mean 2025 or 2035? I don’t know,” Daniels says.

In 2016, then-CEO Travis Kalanick said the quiet part out loud when he argued that autonomous technology—that is, getting rid of drivers—was existential for the ride-hailing company. “What would happen if … we weren't part of the autonomy thing? Then the future passes us by, basically, in a very expeditious and efficient way,” he told Business Insider.

Since then, Uber has poured money into the Advanced Technologies Group’s work—nearly $1.1 billion since 2016, including $457 million in 2018, according to Uber’s public S-1 filing. “We believe that autonomous vehicle technologies will enable a product that competes with the cost of personal vehicle ownership and usage, and represents the future of transportation,” the company wrote in its prospectus. It continues to invest despite slowing revenue growth, which fell by half in 2018.