Uber's stock has done exceptionally well this year. At the time of writing this post, it's up over 60% year-to-date. But at the same time, it remains unclear to me what the relationship will be between Uber and this brave new world of autonomous vehicles.

I mean, right now, if you're in Phoenix, I'm told you can order a Waymo car through Uber's app. But if you're in San Francisco, Waymo customers must use the Waymo app. It's all bit mirky right now, but Uber is just trying to put "as many cars on Uber's network as possible."

There's also an argument that, for the foreseeable future, ride-hailing networks are going to need some mixture of both human and robot drivers. I get this argument. But beyond the short term, I think there will be strong incentives to completely eliminate human drivers.

Last month, the New York Times announced that Uber is in talks with Travis Kalanick, the company's co-founder who got pushed out 8 years ago, to help him buy autonomous vehicle company Pony.ai.

It's a bit of an interesting story. Pony is a Chinese company, but because the US doesn't want Chinese tech to become too deeply embedded in the American economy — and has become increasingly hostile to such companies — it has been readying a clean US subsidiary of the business for sale.

This is what Travis allegedly wants to buy with the help of Uber. And it's particularly noteworthy because it could be an indication that Uber is worried about Waymo and wants to have its own AV unit (which it had previously, but then sold off in an effort to quickly reach profitability).

In August 2023, when Waymo first launched its self-driving vehicles in San Francisco, the market shares of Uber and Lyft were 66% and 34%, respectively.

By the end of last year, these market shares had dropped to 55% and 22%, respectively, with Waymo on equal footing with Lyft. (These numbers specifically refer to rides that start and end within the boundaries of where Waymo operates and do not, for example, include rides to the airport.)

So the result was low double-digit losses in market share for both companies. This is not all that surprising given that autonomous vehicles are a novel thing and that Waymo's cars seem to be nicer than most Ubers and Lyfts. But it also shows that there maybe isn't a great deal of customer loyalty between the various platforms, that is, as long as the wait times are reasonable.

I think the more difficult questions remain: What does the ride-hailing space look like as AVs become more ubiquitous across our cities? Who is going to own what? And will individual car ownership fall?

We've spoken before about the peak load problem that Waymo faces as a result of owning its own cars. It's expensive to manage a fleet like this, especially relative to Uber's variable supply model. So one scenario remains a close partnership between Waymo and Uber, where Uber handles any above-base spikes in demand with actual humans.

But another scenario might be a hybrid approach where some of the AVs are owned by a ride-hailing company and some are owned by individuals who just contribute them to the network when they don't need them. This is what Tesla has been promising and, who knows, maybe it'll actually happen someday. Reilly Brennan recently wrote about this over here.

Personally, I would love to not own a car. It's also hard to imagine being able to make much money off a car that only goes to work during peak times, when the other robots are too busy. So I'm not convinced of this model. But I can see why Waymo is gaining market share. Privacy and a nicer cleaner vehicle are desirable features.

Uber's stock has done exceptionally well this year. At the time of writing this post, it's up over 60% year-to-date. But at the same time, it remains unclear to me what the relationship will be between Uber and this brave new world of autonomous vehicles.

I mean, right now, if you're in Phoenix, I'm told you can order a Waymo car through Uber's app. But if you're in San Francisco, Waymo customers must use the Waymo app. It's all bit mirky right now, but Uber is just trying to put "as many cars on Uber's network as possible."

There's also an argument that, for the foreseeable future, ride-hailing networks are going to need some mixture of both human and robot drivers. I get this argument. But beyond the short term, I think there will be strong incentives to completely eliminate human drivers.

Last month, the New York Times announced that Uber is in talks with Travis Kalanick, the company's co-founder who got pushed out 8 years ago, to help him buy autonomous vehicle company Pony.ai.

It's a bit of an interesting story. Pony is a Chinese company, but because the US doesn't want Chinese tech to become too deeply embedded in the American economy — and has become increasingly hostile to such companies — it has been readying a clean US subsidiary of the business for sale.

This is what Travis allegedly wants to buy with the help of Uber. And it's particularly noteworthy because it could be an indication that Uber is worried about Waymo and wants to have its own AV unit (which it had previously, but then sold off in an effort to quickly reach profitability).

In August 2023, when Waymo first launched its self-driving vehicles in San Francisco, the market shares of Uber and Lyft were 66% and 34%, respectively.

By the end of last year, these market shares had dropped to 55% and 22%, respectively, with Waymo on equal footing with Lyft. (These numbers specifically refer to rides that start and end within the boundaries of where Waymo operates and do not, for example, include rides to the airport.)

So the result was low double-digit losses in market share for both companies. This is not all that surprising given that autonomous vehicles are a novel thing and that Waymo's cars seem to be nicer than most Ubers and Lyfts. But it also shows that there maybe isn't a great deal of customer loyalty between the various platforms, that is, as long as the wait times are reasonable.

I think the more difficult questions remain: What does the ride-hailing space look like as AVs become more ubiquitous across our cities? Who is going to own what? And will individual car ownership fall?

We've spoken before about the peak load problem that Waymo faces as a result of owning its own cars. It's expensive to manage a fleet like this, especially relative to Uber's variable supply model. So one scenario remains a close partnership between Waymo and Uber, where Uber handles any above-base spikes in demand with actual humans.

But another scenario might be a hybrid approach where some of the AVs are owned by a ride-hailing company and some are owned by individuals who just contribute them to the network when they don't need them. This is what Tesla has been promising and, who knows, maybe it'll actually happen someday. Reilly Brennan recently wrote about this over here.

Personally, I would love to not own a car. It's also hard to imagine being able to make much money off a car that only goes to work during peak times, when the other robots are too busy. So I'm not convinced of this model. But I can see why Waymo is gaining market share. Privacy and a nicer cleaner vehicle are desirable features.