Futurists all over are hailing Uber’s big announcement that a self-driving fleet of vehicles will begin operation in Pittsburgh later this month. Bloomberg reports:
Uber’s Pittsburgh fleet, which will be supervised by humans in the driver’s seat for the time being, consists of specially modified Volvo XC90 sport-utility vehicles outfitted with dozens of sensors that use cameras, lasers, radar, and GPS receivers. Volvo Cars has so far delivered a handful of vehicles out of a total of 100 due by the end of the year. The two companies signed a pact earlier this year to spend $300 million to develop a fully autonomous car that will be ready for the road by 2021.
The Volvo deal isn’t exclusive; Uber plans to partner with other automakers as it races to recruit more engineers.
Uber’s bold step into the future signals that it isn’t content simply to make it easier to call and pay for a taxi. That’s vital, because as another article in Bloomberg reports, at least one expert says Uber isn’t worth as much as its investors think:
After crunching some numbers, [Aswath Damodaran] believes that Uber’s true valuation is actually south of $30 billion, less than half of the $62.5 billion it was pegged at in its most recent round of funding. Here are a few reasons why Damodaran believes the prospects for Uber’s business aren’t as rosy as they might seem.
Damodaran gives several reasons to be skeptical about Uber’s value, but a couple in particular caught our eye:
Right now, Uber and other ride sharing platforms don’t have to consider their drivers as employees, but that could change. On top of that, there are constant regulatory hurdles that add to expenses. “Seattle’s decision to let Uber/Lyft drivers unionize may be the precursor of similar developments in other cities and higher costs for both companies,” Damodaran writes. “On the legal front, cities continue to throw up roadblocks for the ride sharing companies.”
If you want to understand a big part of why Uber is pushing autonomous vehicles so aggressively, look no further than the effect they will have on labor costs. It will be harder to complain that the company isn’t paying health benefits for its drivers when Uber cars aren’t driven by anyone. No doubt, Uber CEO Travis Kalanick is looking forward to not having to worry about all the labor advocates trying to unionize his drivers.
This is how the blue model self-destructs: efforts to boost the salaries and benefits of workers in industries on the wane only add pressure on firms to automate jobs all the faster. To be sure, Uber would be trying to make its cars driver-free regardless, but the labor advocacy organizations are only speeding up the creative destruction and making it more destructive. Even if drivers get benefits, it won’t be long until their jobs disappear anyway—if Uber’s efforts succeed, that is.
By the way, it isn’t just taxi drivers who should be thinking about other career options. Judging by Uber’s recent acquisition of a company called Otto, truckers should be too.