I would be surprised if Uber gets very far with their autonomous vehicle testing, especially in difficult driving conditions where LIDAR and sensors don't perform so well, until they can't reliably export it to other markets. There are some of the smartest minds in the world working on this and still haven't figured it out, and Uber's researchers are no exception. And this also completely disregards the legislation side of things, which would prove to be a huge obstacle as well, even with Uber's obscene amount of money they pour into it.

1) Plenty of cash coming in for research

2) Use to skirting laws that get in their way - so they may just start cutting back on costs later. Maybe have the human operator remote in, instead of actually sit in the car.

I would be hesitant to trust a new technology developed by a company with a record of skirting laws and regulations.

How are they going to convince the owners of the autonomous vehicles to lend them their cars for free? :-)

Wouldn't this change Uber, since now they'd have to make a massive capital investment to operate?

This does indeed change their business significantly, because now they have to buy and operate all of those cars themselves, rather than being "just an app" that takes a commission from what the drivers make.

If Uber is not careful with cost management, it could very well sink the company.

It seems unlikely to me though.

Actually I dislike uber because of how they flout regulations and hurt workers. But if they get rid of the workers altogether, It would be hard to complain. Especially if fairs become a fraction of the price.

I wonder if prices will drop that much. Is owning and maintaining a massive fleet of driver-less cars really that much cheaper than just paying a bunch drivers that own and maintain their own car?

First, efficiency of utilisation: Driverless cars can be driven around the clock (modulo maintenance and refueling time), so car depreciation/maintenance gets amortised amongst more passengers.

Second, efficiency of scale in maintenance: It is extremely unlikely that the maintenance costs that uber drivers take on - buying parts retail and taking their car to the nearest garage for repairs - are lower than what would be a dedicated factory-like maintenance shop for thousands of automatic cabs.

And third of course: direct wage costs of the driver once you subtract car maintenance from fares is still a lot bigger than zero, so eliminating that saves money.

So in theory can normal cars. Many taxi companies (and I'm assuming at least some Uber drivers) share one car between 2-5 drivers to maximize the time on the road.

The other aspect you're not considering is that even after you take economies of scale into account a driverless car will almost certainly cost more than the market price of the current median Uber car. I'm guessing that $3000-5000 will get you a perfectly Uber-worthy car that will give you years of fairly trouble free use. What will a driverless car cost?

And that is ignoring the fact that most Uber drivers would have owned and maintained a car even if they had had a different job, so the only 'cost' is the marginal cost of extra maintenance being used as an Uber car causes.

Also I wouldn't be surprised if maintenance costs will also be higher at least in the short-to-medium term due the complicated and experimental nature of the components involved.

So even if there are long term savings I imagine that they will take a long time to materialize and even longer to show up in fare-prices, unless Uber decides to subsidize driverless fare to kick start the market.

And if they are not first with driverless cars, big national cab-companies are also in the run.

Many (most?) jurisdictions differentiate between for-hire-vehicles and taxis, and Uber doesn't operate unlicensed taxis as far as I know. I don't want to claim to know everything about Uber - but services like their black car and UberX service are not considered taxis in most jurisdictions that I'm aware of, for a number of reasons including because they accept only rides that were arranged in advance, they have no special paint job or advertising, etc. According to Quora, Uber does operate "UberTaxis" and those are actual medallioned taxis: https://www.quora.com/What-is-the-difference-between-an-Uber... - so it seems to me that Uber's classic services were never regulated by taxi laws to begin with, and the actual taxi services they have now comply with them.

I'd like to learn more about this topic though, since I find the boundary between business and law interesting in this case, so I will be glad to review further details if someone can provide them. (I have no connection to Uber nor that industry except as a once-in-a-while customer.)

Googling 'uber pays lawyers to drivers' also gives matches for NA although I didn't look the details.