Uber continues to bleed money, and that’s raising fresh questions about whether those losses might lead the company to abandon its efforts at developing self-driving vehicles. Meanwhile, there are increasing signs of consumer skepticism about autonomous cars and trucks, even as startups and longstanding firms revise their funding pitches and race to put those vehicles on the road.
The ride-sharing technology provider managed to trim its loss in the second quarter of 2018, to $891 million from the $1.1 billion reported for the same period last year — but still more than the $550 million loss reported for the first quarter of 2018. An Uber spokesperson said that Uber has been spending more money on new businesses, such as food delivery and scooters.
Investors, though, are reportedly putting more pressure on Uber to stem its spending on its self-driving car unit, according to an Aug. 15 article in The Information that relies on an unnamed “person familiar with the issue.” Still, the report is sparking discussion and speculation throughout the self-driving vehicle industry.
Uber does not report figures associated with its work on self-driving technology, but the source told the publication that the company spends between $125 million and $200 million per quarter on its self-driving unit, and has been for “the past 18 months.” Uber so far has spent $2 billion on self-driving technology development, the report said.
To put that into perspective, if Uber spent $125 million on self-driving technology work in Q2 2018, that would equal 14 percent of the company’s quarterly loss. If it spent $200 million, that would equal 22 percent of the quarterly loss. Uber’s Q2 revenue was about $2.8 billion, a 63 percent year-over-year increase.
“Some investors” reportedly are telling Uber to sell the self-driving car unit, the report said — an idea that has been floated before. If so, that just adds to the pressure on Uber regarding its self-driving efforts in the aftermath of the March incident in Arizona, in which one of the company’s self-driving prototypes hit and killed a pedestrian (a human was in the car at the time). That accident led to Uber suspending its self-driving road tests.
An Uber spokesperson declined to comment Thursday (Aug. 16) on the item from The Information. But a person familiar with the inner workings of the company told PYMNTS that Uber is still committed to its self-driving development work, and that road tests could resume in the coming months. The company reportedly plans to conduct tests in Pittsburgh, but with more control by people, and with new safety and monitoring standards designed to prevent a similar accident.
The report about Uber facing investor pressure comes less than a month after another signal emerged that some investors might be growing impatient about self-driving vehicle development efforts.
When Google parent company Alphabet reported second quarter earnings in July, it said that losses for its Other Bets segment — a corporate umbrella that includes experimental projects, such as the Waymo self-driving technology unit — had an operating loss of $732 million, a 16 percent year-over-year increase from the same period in 2017.
Stock-based compensation for Other Bets hit $127 million — about 88 percent of the unit’s quarterly sales, and up 57 percent year over year. According to some observers, that increase might indicate that hiring costs for Waymo employees are increasing as the market for connected and self-driving automotive technology continues to grow.
Granted, there are no clear signs of an investor rebellion over those losses, or Waymo. But during the post-earnings conference call, an analyst told Alphabet executives that he’s been getting “a lot of questions about Waymo,” and then asked Alphabet executives about the best ways to think about the “capital allocated to the Waymo business in the coming years.”
Alphabet Chief Financial Officer Ruth Porat told the analyst that Waymo remains is its “very early stages,” but added that in 2018, “the focus has been to launch the commercial rider program in Phoenix.”
Meanwhile, investors continue to place bets on self-driving technology, with funding during the second quarter of 2018 surpassing the combined amount of capital raised by the industry over the last four years.
Some recent investment activity includes more than $210 million raised by Pony.ai in two funding rounds; the startup also said it has received permission from China’s government to test autonomous vehicles in Beijing. Zoox, another startup — one that reportedly aims to build a self-driving car from scratch — plans to raise $630 million.
Additionally, investors continue to fund projects that aim to build self-driving technology for the long-haul trucking industry, with $40 million in Series A funding recently being raised by Kodiak Robotics.
It’s not just young firms that are seeking capital for self-driving vehicle development, either. Ford stands as a good example of that; it created a specific self-driving business unit as it seeks investors to back that effort.
Unlike the typical startup, Ford can serve as a “one-stop shop for self-driving vehicles and can bring the entire ecosystem together, meaning an investor in this LLC would be looking at bringing this technology to market and developing the business, the revenue and the profits,” according to Sherif Marakby, CEO of Ford Autonomous Vehicles LLC.
In fact, Ford seems to be positioning itself almost an anti-Uber approach when it comes to self-driving vehicles. A recent public letter and 44-page report from Marakby to the U.S. Department of Transportation, entitled “A Matter of Trust,” details how the company uses two-person vehicle teams, “rigorous training and certification,” sensors and other technology and features to ensure the safety of its road tests.
The Ford report might serve as well-timed PR.
That’s because a recent Pew survey — one conducted after the accident involving the Uber vehicle — found that 75 percent of respondents would rather ride in vehicles driven by people, even if “driverless cars were common.” And 54 percent of respondents said they never want to ride in self-driving vehicles.
Another survey provides a similar view in the aftermath of the Arizona accident. While more consumers are aware of the rise of autonomous vehicle technology, fewer people seem to like it, according to Cox Automotive. In 2016, 30 percent of survey respondents said they would never ride in a “fully autonomous car.” Now, 49 percent say that.
No one said the road to the self-driving future would be smooth or easy. The money that is flowing into companies building this fledgling industry gives reason for optimism that the problems are speed bumps, the types of setbacks common to all innovation. Still, consumers are on alert, and more accidents could easily put up more roadblocks.