July 25, 2023 — As part of its second-quarter earnings announcement today, local transportation and delivery giant Uber announced its biggest bet on autonomous vehicles yet, saying it would purchase 2,500 driverless cars from Google. In addition, the two companies have agreed to a deal in which Uber will share data from its local transportation services with Google, which will use it to further improve its own autonomous car-routing algorithms.
Uber has committed to invest up to $375 million for a fleet of Google’s GX3200 vehicles, which are the company’s third generation of autonomous driving cars, but the first to be approved for commercial use in the U.S. The deal marks the largest single capital investment that Uber has made to date, and is also the first enterprise deal that Google has struck for its new line of driverless vehicles.
The next generation of driverless car
It’s been just five years since Google announced it would begin manufacturing its own driverless cars, and just two-and-a-half years since those vehicles have hit the streets. But the company is already on its third car model, following the first-generation GX1000 two-seat “commuter” model and its followup GX2100 five-seat family sedan.
The GX3200, which was shown off earlier this year at the Detroit Auto Show, is Google’s latest effort to produce a fully electric, fully autonomous vehicle. The car seats four comfortably and has room for up to three suitcases in its rear storage compartment. Like previous Google models, each car acts as its own wireless base station, so that passengers can connect to the Internet through Google’s WirelessGig service.
Due to its low weight and the latest in fuel cell technology, the GX3200 can get up to 750 miles of travel on a single charge, or about 48 hours on standby mode. Like Google’s other autonomous vehicles, the GX3200 is designed to find and dock in the nearest Google PowerUP station whenever it’s not in use.
But unlike the first-generation GX1000 or the follow-up GX2100, this latest car from Google is meant strictly for non-personal use. With it, Google is targeting the enterprise market of local transportation providers like Uber, as well as various municipalities like New York and Chicago. The idea is that those cities could finally do away with their outdated taxi systems and move to a more fully automated fleet of on-demand vehicles.
An on-demand, autonomous Uber
For Uber, meanwhile, the purchase could represent a more driverless future for its local transportation service. While the company has experimented with the use of autonomous cars as part of its fleet, those cars still needed an Uber “driver” present in case of an emergency. However, since the GX3200 has been licensed for commercial use in several states — such as California, New York, Illinois, and Washington — Uber will be able to deploy the cars without drivers in several of its largest markets.
The company hopes to have its first set of driverless cars on the road by the end of the year, introducing a new service called uberAUTO using those vehicles in one or two of its markets at first. Based on the reception there, Uber says it could have the service available in up to 10 markets by the end of next year.
As part of the deal, the companies will work together to install the latest Uber logistics software directly into the vehicle, and Uber will share some of its traffic and routing data back to Google. With that data, Google says it will be able to provide more accurate real-time information to all cars that are part of its autonomous driving network.
In general, the move to so-called driverless cars and on-demand transportation services has resulted in faster commute times and less congestion in many major cities over the last five years. Uber claims that its service has reduced traffic by up to 35 percent already in many of its biggest markets, and putting more efficient driverless cars on the road should only help improve that.
Meanwhile, the move to autonomous cars, though just a few years old, is already starting to benefit drivers and passengers alike. In California, where the state is testing so-called “autopilot lanes” on the freeways, driverless vehicles can speed up to 120 miles an hour, drastically reducing commute times. And while it’s still early, Google has yet to have an autonomous vehicle be found “at fault” for a major accident, even at those high speeds.
Driver and Auto Manufacturer Concerns
That said, not everyone is happy about the idea of on-demand, driverless cars. When the news was first reported several months ago that Uber and Google were in talks, some of Uber’s drivers expressed displeasure at the idea of being replaced by autonomous vehicles, waging protests outside of its international headquarters in San Francisco.
When asked how the deal would affect its worldwide workforce on the company’s earnings call today, Uber CEO Travis Kalanick said driver concerns are a bit overblown. Uber has more than 50,000 contractors as part of its driver network globally, but he said the Google fleet purchase won’t drastically reduce that number.
“This will affect a very small portion of our worldwide driver base,” Kalanick said, noting that the Google cars will only be deployed in the small number of markets where they are legal for commercial use. He also pointed out that drivers who were affected as part of the company’s uberRIDE transportation division could also transition to its uberDELIVER local delivery service, which continues to grow around the world.
The move to more on-demand transportation has also been a shock to the traditional auto manufacturers. Drastically reduced demand for cars in urban and even some suburban areas where Uber operates has sent shares in companies like Ford and General Motors to five-year lows. With auto sales lagging, those companies have introduced their own on-demand rental and transportation services, but consumer interest has been lackluster so far.
Shares in Uber, meanwhile, continue to soar. Its stock was up a whopping 10 percent in after-hours trading on news of the deal, bringing shares to an all-time high.
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