As IPO proposals value Uber at an eye-popping $120 billion, auto makers are racing to gain ground in everything from car sharing to driverless technology. At stake: who will control the future of transportation.
I know this is the wrong place to ask this but I'll do so anyway: How much influence do you think Tesla had on the direction these companies are moving now? If Tesla never existed (and no other equivalent came onto the scene) what do you think these companies would look like today?
Depends on which part you are talking about. If you mean their BEVs in general, I think Tesla increased the rollout speed by 2-5 years. Tesla got people wanting EVs, but I don't think it has had much influence on other manufacturers, unless Elon Musks claims convinced lawmakers to make more stringent emission standards (impossible to prove either way,) and their speed is mostly about compliance.
If you mean the push towards seeing self driving as a reality, then I think Tesla had a huge influence.
> unless Elon Musks claims convinced lawmakers to make more stringent emission standards (impossible to prove either way,) and their speed is mostly about compliance.
Yea I agree, If Tesla were to have failed in the early days I think it would have allowed the automakers to push back on regulation. We can also see an example of this in how GM and others managed to push back the ZEV regulations in California which led to the recall of the EV1 so given this event and where we are today, I think Tesla had to have had some influence.
Honestly, TSLA probably had more industry wide influence here than they did on BEV uptake. The industry was (forced) moving to BEV anyways. FSD while on the roadmap did not seem like a priority. The industry was more piece meal building safety features that would eventually be needed for FSD. TSLA gets all the publicity and more importantly stock movement for this so many others followed.
Anyone that buys into Uber at 12 billion let alone 120 billion deserves to go broke.
The uber story makes even less sense than the TSLA story. So Uber will win the day by taking on billions in capital costs that they currently push onto their drivers? All to save 14 dollars an hour? Not like they will have to hire an army of on staff workers to service, maintain and clean the cars.
Have you seen the numbers? It's a great business model. I'll give you that there's an existential risk if self driving comes to fruition. Uber is taking steps to mitigate that, but it's a risk you need to get paid for. Away from that, however, it's a capital light business model that gushes free cash flow. You can see it in their mature markets.
I'm pretty sure Uber has massive cash burn, similar to Tesla. The problem is that the drivers have to be paid, and enough to pay off all car bills such as insurance, maintenance, etc. on top of their basic wages. So far, Uber simply isn't charging enough to cover all of that cost.
The capital expenditures are borne out by the drivers, not by the company itself. It's only capital light if you accept very high fixed costs. Ultimately, Uber/Lyft will just end up being a better taxicab service. While there's definitely money to made off of that business, I can't imagine how you would get to $120B valuation.
The asset of Uber is not its user base (like with most other apps, services etc.) it is its driver base. Uber´s core skill is to link drivers and users together but when Cars drive them self there is no need for a driver anymore and at the same time there is no need for Uber anymore. All you need to provide your service than is the Cars and Cars is exactly what Uber does not have.
In a weird way Uber gets disrupted by big auto ;)
This is what I mean. Uber solves FSD but how do they profit from it? They will have to spend billions in CAPEX to buy a fleet of cars. They will have to hire tens of thousands of direct employees. I don't see how they cut anywhere close to enough costs compared to their skyrocketing new costs.
Services like Uber require density and local government not regulating you out of existence. Some major cities (New York, London, Paris) already have issues with Uber, that will probably get worse if there's a bunch of driverless Uber vehicles clogging up the road indefinitely, moreso if everyone has their own exclusive fleets unlike current ride share drivers who often use multiple apps.
Say nothing of the cost of needing to own and maintain a fleet of millions vehicles worldwide. At least Tesla's plan outsourced the ownership and maintenance to buyers.
You can't really force a growing tech sector in a city. It has to happen organically.
Cities with good tech sectors are usually a byproduct from the surrounding universities or having a big company located in it.
In Canada, specifically, where RIM/Blackberry is headquartered, a lot of tech companies/startups have sprung up as a byproduct from the University of Waterloo which has a lot of tech talent, and from RIM being located in the area.
I don't know about that.
They were fast to recognize the power in having a myth of Silicon Valley. Over time, the myth became an essential ingredient in creating their reality. That was a smart move and one that Detroit mostly ignored until the '00s.
Silicon Valley also has a big thinking and far reaching PR industry. They're skilled at placing stories like the one linked here.
I never thought it that way. I would definitely say Detroit did it too by having the whole auto industry thing here, in the same sense that SV has their tech myth.
But I like your Silicone Valley myth idea.
Going public is the new black, everybody's doing it.
Is it going to be the reality in 3 or 4 years that some or all of Cruise, Argo, Aurora, Uber ATG, and possibly even Waymo will be operated as companies traded on the public markets?
Tesla and Amazon have shown that it's possible to go a long time as a public company without any profits, so long as people believe you're capable of bigger things.
Robotaxi companies that have all the parnters and talent they need to get the show on the road may see substantial revenue growth over the next decade, but I doubt there will be much in the way of profits. Long term investors will need to believe in the promise of autonomous vehicles.
There’s been plenty... and I believe it’s because people have no idea where to stick excess cash. But I believe what you’re really trying to say is that after all this long term cash injection into the market over the past 10 years how could we possibly have more cash to chase new IPO’s
The answer it that the market could become more volatile and as old companies or commodities are kicked off the exchange or go from large cap to small cap companies, that frees up cash for new companies entering the exchange.
What I meant to imply by "Going public is the new black" is that IPOs are coming back into fashion. GM Cruise has signalled IPO intentions. Uber and Lyft are racing to go public. 3 is a trend. Certainly it's unusual, we have been in an IPO drought the last few years, with hardly any tech IPOs. The only exception I can think of is SNAP.
Robotaxi companies are not car companies as we know them. They are not tech companies as we know them. Robotaxi companies are a new thing. Stakeholders are still feeling out how to best structure and fund a robotaxi venture.
For now, I think we are still talking just two IPOs next year, Lyft and Uber. Cruise is a more distant maybe. I don't know if that makes a trend. Softbank is the new IPO.
"SoftBank Gives Startups Billions of Reasons to Hold Off IPOs" (WSJ)
Auto executives say they need to avoid a nightmare tech scenario that’s become a common refrain at industry gatherings. They don’t want to become the next “handset makers”—commodity suppliers of hardware, helplessly watching all the profits flow to software makers like Apple Inc. and Alphabet Inc., the parent of Google. Both companies are investing in software for driverless cars.
I suppose this article is musing about how the big car companies are responding to the pressure from tech companies, and how they are trying to pivot into tech companies themselves, which is a fine premise.
I do think the title is misleading though, by conflating "Detroit" with "The Big 3" (General Motors, Chrysler and Ford).
Detroit itself is already well on it's way to diversifying it's economy and particularly making investment in tech. There is what's known as "The Family Of Companies" (1) referring to a whole fleet of businesses supported by Dan Gilbert of Quicken Loans and many of them are in tech and in the buildings downtown. Gilbert himself owns something like 30+ buildings in the Detroit area.
There is a start hub near by as well in Ann Arbor which has recently produced companies like Duo Security and FarmLogs.
Real estate/cost of living here is much cheaper than in most of the bigger tech hubs and it's bringing all sorts of companies.
There is a somewhat valid critique that salaries aren't quite competitive for tech, but I've found the quality of life has been quite nice. For ex: I know several people coming out of bootcamps with or without degrees and making 70/80~k with 1-2 years experience, but with rent being only 700-1k for your own apartment ( less with roommates obv ), you wind up putting away plenty at the end of the month.
In my opinion, it's actually a pretty great place to live and is handling the shift of becoming a tech city quite well.
It's not just a struggle for control - it's a struggle for survival. The auto industry has reached one of it's rare inflection points with the arrival of pure EVs. They will have to offer a model that people will buy, or they'll lose the company.
Previously, this happened to the US tire makers in the post-1973 oil-crisis years. They'd been happy producing bias-ply tires, when suddenly everyone wanted radials because they got better mileage and lasted 2-3 times as long. Goodyear was the only one to make the switch, and they're still in control of their business. All the others - Firestone, General, etc. did not, and ended up getting sold to someone else.
I grew up in a suburb of Detroit, and came of age in the early 80s. Every time a "business cycle" came along, the leaders of Michigan swore that Detroit needed to diversify into something other than cars. Then, when things picked up, all was forgiven and we started making those cars again. Rinse and repeat.
"Detroit" meant all of the Midwest, since every town had a plant, small or large, doing something for the auto industry.
Auto companies already left Detroit in the dust. Will tech save it? Everyone in Silicon Valley forgets that the second part of self driving is the car part. The POC is done (waymo and cruise) The next next step is mass production.
Google is notoriously bad at that phase.
The companies knowledgeable about that are the established auto companies. Tech will come to Detroit to get close to that knowledge (the manufacturing may be gone but the offices remain). Detroit is going to be a happening place for the next decade.
Got out 5 years ago and headed south - was the best decision I've ever made. It wasn't until I left that I realized just how economically backwards and dysfunctional the region (and state) was. I remain dubious about the city's prospect at regained glory.
But I applaud those who stick around and think well of the city and the tri-county area, and who fight the good fight to improve it. I wish them better luck and fortune than those that preceded them in the prior 50 years.
'Some auto executives say they can hold on to their roles as hardware providers while also tapping into the growth of more-profitable services'
Simple question for anyone in the auto industry who thinks this statement makes sense: for every car put on the road by Uber / Lyft (or any similar service you invest in), how many net new car sales will you see? (hint: their passengers may no longer need to have a car of their own)
I hope that this is just them putting their spin on the story and that when it's all said and done they realize their future depends on minimizing how much they have to shrink rather than maximizing how much they can grow.
Kodak believed that the move from film to digital represented an opportunity. It would have been for them, had they been realistic as to the size of the opportunity.
>Auto executives say they need to avoid a nightmare tech scenario that’s become a common refrain at industry gatherings. They don’t want to become the next “handset makers”—commodity suppliers of hardware, helplessly watching all the profits flow to software makers like Apple
Weird comparison since Apple has always made the lion’s share of profits from hardware. Also interesting contrast between big automakers and Tesla. I see Tesla as being in the hardware biz primarily
I'm not sure how helpful it is to think of the world's largest companies as "tech companies" anymore. The previous dominant companies simply failed to adapt to incorporate new technologies (witness the fate of Sears vs Amazon).
And Detroit's auto manufacturers aren't doing much in the way of electric or self-driving, so if they fail that's on them. The best self-driving company and the best electric car company are both California "tech" companies.