> However I find it much more plausible that Waymo and Tesla will vendor out the details of the rideshare service rather than build their own from scratch.

Yeah, but that puts all value add in waymo or Tesla's hands, not Uber's. Uber will have no advantage, and cannot charge juicy margins.

I wouldn't be too worried about Tesla if I was Uber. Even if they get the hardware first without competition it would be a massive undertaking to build out a competitive transport business. The capital costs to create a fleet to have similar hailing times to Uber would be absolutely massive - now you have to buy the car instead of just recruiting a driver - plus they'd have to catch up on the logistics to try to pay for a tens-of-thousands-of-dollars car 5-to-20 bucks at a time.

Waymo is more interesting since things like Google Maps routing and Waze being under the same roof give them a ton of logistics expertise to potentially tap, Alphabet also has a shitton of capital if they wanted to expend it, and they could look at it as a long play where they aren't just getting the cost of the ride back, but they're also collecting all the data. (However, it's not clear to me that this is much more data than Google already HAS just from phone location history.

barring a change in interest rates, established companies with the ability to borrow should have effectively limitless capital to deploy. We're arguably at a unique point in history with respect to small businesses ability to add leverage to throw around megacap capex e.g. WeWork

Unless TSLA or Waymo decided that they didn't want to deal with a taxi network there shouldn't be any reason they couldn't form an independent company to absorb the loan risk ( with a PE partner potentially ).

Tesla's plan is to have an option, after you purchase or lease the car, to make it available as part of the Tesla network. This is something you could likely enable from the Tesla app on your smartphone. That way, they don't need to pay for any vehicles to build a fleet. They have a huge advantage, being a vertically integrated automaker.

Not really, Uber has accumulated around 3 million drivers, Tesla has around 1 million cars with FSD capabilities and growing much faster than Uber. Tesla has the advantage that their fleet would be composed with their owned cars plus customer cars, my prediction would be that they would quickly becoming bigger than Uber's fleet of drivers once they have FSD and with a click of a button you could send your car to make money for you.

Tens of billions is not really that massive in 2020.

Uber will have the largest network of customers and that’s far from trivial to build. It easily costs $2+ per customer to get your app installed on their phone, and takes years to get hundreds of millions of installs.

If we can agree that switching costs are low for users, and that the cost of building an autonomous vehicle fleet is very large, then the advantage goes to Google who has both a huge distribution machine (owning Google Maps) and massive amounts of free cash flow to deploy.

They could purchase 100k vehicles in a blink of an eye, outfit them with AI, deploy in NYC Chicago Atlanta Austin LA and bam users will convert. They don't need to cover the globe, just the absolute most lucrative cities (which Uber relies on to subsidize smaller cities).

Additionally, I am not convinced the transition from largest taxi service to AV will be smooth sailing from a personnel perspective. Not having to manage the politics of a deeply embedded global supply chain is one of Tesla's advantages relative to big auto. At some point, drivers may say F* this in dealing with Uber which Google avoids from the get go.

The consumers are in Ubers pocket. Wayne and Tesla will be smooching to be Uner's chosen one. Businesses are demand based, not supply based.

I'm not sure you're considering how fickle riders are. I work in a (what used to be) high travel group of tech. Most all of my peers and I are heavy rideshare users. Honestly, we don't care who the app owner is, but want the rides to be consistent and reliable. None of my peers is tied to Lyft or Uber, even with promotions and "status" gimmicks. If a ride can show up 3 minutes faster on Lyft - I'm taking that over Uber. To say the consumers are in Uber's pocket is ill informed. If you're taking hundreds or thousands of rides a year and aren't paying for any of those rides - the ride share company has little to no bearing on your choice. It's not like flying an airline where there's significant advantages to reap.

You are discounting the difficulty of getting typical consumers (not "high travel group of tech") to install a 3rd, 4th, 5th app to perform the same function that Uber and Lyft already do. And when you are in a hurry, you might check 2 apps, but will you check and compare 5?

Yeah, I got my parents to start using Uber. They are not very technologically literate and could definitely not be bothered to download a new app to save 10%.

But it isn't 10% - it's probably closer to 50%.

The car is $30-50k with a lifetime of what, 10 years?

The driver needs to earn $40k/yr.

The vast majority of the cost is the driver - insurance and fuel are next, ultimately followed by vehicle capex and maintenance.

Also don't underestimate the amount of local news coverage the driverless taxi will get - combined with the "there's no rude, smelly person driving me".

I think you're severely overestimating your case, not to mention the cost will probably be determined by a multitude of factors, one of the big ones being how advanced the self-driving tech is. Most of your points are just theoretical anecdotes.

You're not counting the RD cost that needs to be recouped. You're overestimating the trust people will have with "oh didn't that once kill a person"-autopilot will have.

> not to mention the cost will probably be determined by a multitude of factors,

yes of course, but i included the big ones.

>You're not counting the RD cost that needs to be recouped.

Majority will be sunk costs by the time anyone is making money. But obviously, they will charge what the market will bear - but the margin improvement vs driven vehicles will be very significant.

The first robotaxi fleet be able to put any driver-based taxi company out of business simply by undercutting on price for as long as it takes. The only enemy is time to build that base - but the first company to successfully bring a robotaxi to market will necessarily have absurdly deep pockets because they invested the R&D necessary to build something that drives itself. If someone has a robotaxi that isn't Uber, Uber is going to be in very big trouble.

Also, I'm not really invested because I don't care - but it's really hard to overestimate the implications this has to the cost of (non-mass) transportation.

I worked directly in the space and I can tell you you're overestimating your "persona"s portion on the market. Also, why so you think that car is arriving faster for you on another app?

They're running more bonuses at timeframe, e.g. it's more costly.

The airline example is great. Because that's exactly the direction ridehailing is going. Just look at Uber rewards. At least with an airline you actually book weeks in advance. With ridehailing you're buying super close to the actual event.

Beieeve me, Uber has done one thing well and that's consumer ToM..

I often hear people say ubers tend to be easier/faster to get than lyfts.

When I visited Japan last year, I wasn't going to bother finding out what competitors existed. Just firing up the uber app is no-brainer in comparison.

This is similar to the dichotomy of McDonald's being almost universally considered bad junk food, yet they are packed in roadside locations in small towns because they are popular rest areas among travellers whereas local mom-and-pop competitors are far less successful. Brand is a powerful thing.

I used to work for Thoughtworks and I just used Lyft all the time. I’m not going to look at both apps wasting time basically comparing prices. Definitely not just to save three minutes. I think this kind of thinking, is a very small minority, they probably all read HN too, am I right?

I don’t use Uber cus of ideological reasons. A lot of people, even in this community, are the same.

> I don’t use Uber cus of ideological reasons. A lot of people, even in this community, are the same.

Uber/Lyft marketshare in all US markets tell another story. This community is a small echo chamber and thus rather uninformed.

Yeah, you’re right. I see what you’re saying.

I even forgot what my ideological reason was, something about them stealing tips.

I still don’t think riders are fickle like that, comparing prices amongst multiple ride share app and uninterested in promotions. I think people pick one and stick with it, more out of habit that anything else, not likely to change unless something crazy happens

I was all on Uber until they had some old controversy that I totally forgot about, but I’m not going to use it again, not for something as small as saving a couple dollars or a few minutes time difference

Businesses are a function of supply and demand

But most evidence is pointing to the chicken-egg game starting from the demand side :)

> "I believe uber eats could also earn money in the short term."

uber eats isn't a revenue play, so investors shouldn't expect any real margin contribution from it. instead, it's meant to protect the flanks--to control supply-side costs for rideshare and provide some risk mitigation through product diversification.

That's fair. To be clear I don't expect it to be a huge money maker in the short term, just something that's worth doing. Long term the margins look much better once the food delivery market starts to see some consolidation/higher margins due to less promotions and subsidies.

Very good point on the supply-side costs for rideshare, hadn't thought of that.

even long-term, it's tempting to think that synergies and market consolidation would lead to higher utilization rates through stacking (making multiple delveries at once), but indications from current players in the space are discouraging in that regard.

last-mile logistics is an exceedingly tough nut. i think it's really going to take a wholesale reconfiguration of cities around much more density and mixed-use where shared industrial kitchens and warehouses can make the synergies work out, but of course that's decades in the making.

>i think it's really going to take a wholesale reconfiguration of cities around much more density and mixed-use where shared industrial kitchens and warehouses can make the synergies work out, but of course that's decades in the making.

It's actually closer than it seems if this bet plays out: https://www.cloudkitchens.com/

yes, that's the easiest part and where there has been some activity, but even then, it's a capital-intensive business without obvious super-scalar competitive advantages.

shared industrial kitchens become advantageous only with density, proximity (mixed-use), and (unfortunately) high land values.

If that’s true it’s a really dumb idea because it doesn’t protect anything. Losing money on side hustles is what got Uber into this mess in the first place.

Well, I wouldn't have invested if I weren't bullish. Also this isn't TA: https://www.investopedia.com/terms/t/technicalanalysis.asp