September 15, 2016

UBER launches driverless cars

Image result for uber driverless carsWhat’s most striking about the effort, though, is that it is probably the first time that Uber will actually own physical assets.

Before beginning to deploy its self-driving cars, Uber neither employed drivers nor owned any cars, operating in a completely virtual manner. That doesn’t necessarily mean Uber’s operating costs were low — they spend money on everything from research and development to discounting worldwide to hiring lobbyists — but it did mean that Uber figured out a way to avoid adding drivers’ employee benefits and car ownership, maintenance and insurance to those costs.

That’s clearly all about to change.

As part of its partnership with Volvo, Uber bought 100 XC90s that it hopes to retrofit with self-driving technology and have driving down the streets of Pittsburgh by the end of the year. While it’s probable that Uber bought the Volvos at a discount, the 2017 XC90s start at $45,750. And that is without all the pricey self-driving technologies added on.

Presumably, if initial efforts work, Uber will continue to buy cars and retrofit them with its own self-driving technology as the company ramps up its fleet of driverless cars. Whether it’s from Volvo or another automaker, Uber will likely have to buy, maintain and insure its own cars.

As complex as that will likely be for the company, it still may be more economical than paying drivers.

Today, Uber pays drivers 65 to 80 percent of each fare, so for every dollar a driver brings in, Uber only takes home 20 to 35 cents. Eventually, when drivers are replaced by robot cars, Uber could capture close to 100 percent of the fare.

For example, if a driver performs 100 rides at $5 a ride, Uber will take home $100. With Uber’s new “drivers” — the robot cars — the company will take home close to $500.

The robot cars will also likely do those 100 rides in a shorter time, because it only has to stop to recharge or refuel. Self-driving cars can also be on the road non-stop potentially, racking up more fares in the same time, unlike human Uber drivers who are limited to driving 12 consecutive hours.


  1. One more attempt by rich people to corner wealth and increase unemployment. Snatch all the jobs that human can perform and leave them to die. Who cares?

    1. Why are you so negative? Disruptions will always be there.

      More than a hundred years ago, people traveled by horsecarts and bullock carts. When automobiles were invented, these people lost their jobs yet new employment was eventually created and now the automobile industry is invariably the biggest employer in any country.

      Ditto for railways, airlines and so on.

      Technology is bound to create disruptions. And driverless cars will reduce the number of cars on road while simultaneously improving the safety a million times.