[torbjorn]

Since Uber is about to ipo I have been hearing people question, "How can people highly value a company that is losing so much money???"

The reason is (the potential for) self driving cars. Once/if there is mature self driving tech, they can eliminate the cost of having to pay human drivers. When you consider Uber in that light, as long as they don't run out of money before self driving maturity, then their high valuation makes sense.

This may seem obvious to some but this fact has been entirely absent from every conversation I have heard about the valuation of uber's IPO ( looking at you Marketplace's "Make Me Smart" ;). It seems like it is taboo to point out that Uber needs to eventually eliminate all their human drivers from the equation.

[SilasX]

I don't know why this is downvoted; it's just saying what everyone repeats every time this issue comes up.

With that said, I think it's wrong. There is significant competition on the way to making a working SDC. And Uber will not be alone in producing one. If and when that happens, yes, they can pay a lot less for their inputs. But the output -- the value of the ride -- will also fall in value, since their competitors don't deal with that cost either! It doesn't translate into superprofits.

At the most optimistic, Uber might arrive at a street-ready SDC two years before anyone else. Two years of above-normal profits, equal to keeping the revenue they'd pay human drivers, it just not enough to pay back the costs of the program and extreme returns investors demand.

IMHO, it would make much more sense for Uber to just license the SDC tech as it becomes available, playing the vendors off each other, and focus on making their piece of the product -- the app/customer experience -- better.

[smallgovt]

What I don't understand is why people think Uber will have a competitive advantage vs Waymo et al. once self-driving cars are adopted.

Without a moat, there will be little to no long-term profits.

[torbjorn]

Because people are used to their brand and app? Good point.

[JMTQp8lwXL]

If Uber isn't the first to fully-autonomous, some other company will come about (maybe an extension of the company that creates the autonomous technology) and create their own Uber app and offer rides for cheap, on a scale that Uber couldn't compete with human drivers.

Users are not loyal to a particular ride-sharing app. It's incredibly trivial to switch, and if the new hot autonomous company can offer rides for half the price of Uber, users will switch.

[sonofaragorn]

I've heard this argument before and I think it made sense the first time I heard it when self-driving systems were uncommon. But now every major tech/car company is working on it, should it still be considered?

I mean, isn't it likely that a new company/startup will show up when self-driving systems are robust in 5-10-15 years?