Uber Technologies is in early talks to strike a deal with U.S. subsidiary of Pony.ai, a Chinese-American autonomous vehicle company. This move comes as Alphabet’s Waymo and Tesla ramp up competition in the robotaxi space, pressuring Uber to strengthen its position in autonomous transportation.
Uber, the ride-sharing and delivery platform is reportedly in discussions with its co-founder Travis Kalanick, to help finance his bid for acquisition of the U.S. operations of Pony.ai.
Autonomous vehicle deals
The autonomous vehicle race is accelerating as the technology becomes increasingly viable. Uber already partners with Waymo to operate autonomous taxis in several cities. Tesla recently launched a beta version of its own robotaxi service. If Uber goes through its deal with Pony.ai, it could gain a deeper foothold in the self-driving space.
Uber’s edge over other companies
Uber’s approach to autonomous vehicles seems to offer a structural edge over competitors like Waymo and Tesla. Unlike those companies, which are heavily invested in building and owning both the vehicles and the technology, Uber operates an asset-light platform model. It doesn’t need to own the cars, it owns the distribution layer through its globally scaled app and now, potentially, a stake in proprietary AV technology via a Pony.ai acquisition.
This has given Uber a potential path to superior margins. As autonomous vehicles scale, Uber can integrate them into its platform with minimal incremental cost. A hybrid strategy far more efficient and profitable than vertically integrated models.
Pony.ai deal with Uber
Pony.ai, primarily based in China, holds permits to operate robotaxis and self-driving trucks in both the U.S. and China. Kalanick would run Pony if the deal were completed.
An Uber spokesperson declined to comment on deal talks Pony.ai. He stated, “Uber has a platform strategy, and we intend to work with multiple players in the U.S. and around the world who can safely bring autonomous technology to the world.
Uber CEO Dara Khosrowshahi has maintained that while autonomous vehicles are growing steadily, ride-hailing networks will have both human and robot drivers for years.
Uber’s stock
Analysts rework Uber stock price target on autonomous vehicle expansion. Uber shares currently trade at a reasonable 31x forward earnings.
Uber shares are up nearly 50% this year and the stock has climbed 28% from a year ago.
After years of operating in the red, Uber has decisively turned the corner. The company is now not only profitable, but in fact gushing substantial cash, marking a major inflection point in its financial trajectory.
