Commentary

Uber Orders Thousands Of Autonomous SUVs From Volvo

The future of transportation, as improbable as it still sometime seems, is now in contract form. Uber has signed a deal worth an estimated $1.4 billion to purchase up to 24,000 Volvo XC90 SUVs between 2019 and 2021 that will tool around towns with no drivers aboard.

“Passengers can already hail a ride inside a driverless taxi in a small number of U.S. cities — most prominently Pittsburgh — but not without a human operator inside the vehicle,” observes Peter Holley for the Washington Post.

“Monday’s deal between Uber and Volvo could set the stage for something entirely new: thousands of autonomous vehicles ferrying paying customers to their destinations without a human operator, the beginning of a multibillion-dollar robot revolution that could dramatically reconfigure how people get from one place to another,” Holley continues.

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The agreement, which builds on an existing relationship between the companies, “[marks] the transition of the U.S. firm from an app used to summon a taxi to the owner and operator of a fleet of cars,” write Reuters’s Niklas Pollard and Heather Somerville. “Uber has been testing prototype Volvo cars for more than a year, with safety drivers in the front seat to intervene if the self-driving system fails, in Tempe, Ariz., and Pittsburgh.

“Everything we’re doing right now is about building autonomous vehicles at scale,” Jeff Miller, Uber’s head of automotive alliances, tells the New York Times’s Mike Isaac. “We don’t know exactly how an autonomous world will look. But we know that we want to be the platform that’s at the center of it, from a ride-sharing standpoint.”

Lyft, Uber’s primary rival, has been working with Google-parent Alphabet Inc.’s to make self-driving technology mainstream, as  reported in May.

“Being first to market with a fleet of fully self-driving cars is increasingly important for a company like Uber. In addition to the financial benefits and competitive advantage over Lyft, being the first with driverless cars operating in an on-demand fleet has significant technological benefits,” points out Johana Bhuiyan for Recode.

“Uber’s self-driving division is also facing off against Waymo in another arena. Waymo is suing the ride-hail company for allegedly misappropriating self-driving trade secrets and is expected to begin the trial in this lawsuit on December 4,” Bhuiyan reminds us.

The Volvo order is “a big, risky bet for Uber, which lost $2.8 billion in 2016,” writes Timothy B. Lee for Ars Technica. “When … Bhuiyan talked to company insiders about Uber's self-driving car project in March, she found that ‘many think it is at a technological standstill and plagued by significant internal tension.’ Around the same time, Uber temporarily suspended public testing of its driverless cars after one of its cars collided with another car and flipped over on its side. The company says another driver was at fault in the incident, and it has since resumed testing.”

Indeed, “driving statistics released by analyst firm Edison Investment Research in April showed that Uber’s self-driving technology was 5,000 times worse than Waymo’s, ranking it the worst of six major self-driving car companies testing vehicles,” reports Samuel Gibbs for The Guardian.

Uber has negotiated some ins and outs in the Volvo deal that protect it from forces not under its control.

“The key to the contract, Uber says, is that its deal with Volvo is flexible. While 24,000 is Uber's estimate now, that number could go up or down depending on how the regulatory environment or technology changes. Should its business accelerate, Uber wanted to be able to order more and not get left behind,” writes Biz Carson for Forbes. “Should the technology lag, Uber won't be saddled with a purchase order and a warehouse of unusable SUVs.”

As for the automaker, Volvo CEO Hakan Samuelsson says “the automotive industry is being disrupted by technology and Volvo Cars chooses to be an active part of that disruption. It’s a new market that’s emerging and we’re the first to be delivering into that segment,” reports Elisabeth Behrmann for Bloomberg.

“The purchase highlights the delicate line Uber has been forced to walk as it pursues driverless technology while also trying to keep its current workforce of more than 2 million drivers happy. The company has spent nearly half of 2017 revising driver earnings and perks to make the job more appealing under a program called ‘180 Days of Change.’ At the same time, driver labor is the biggest cost to Uber’s core ride-hailing service,” points out Karen Hao for Quartz.

Then there’s that final stakeholder, the passengers. But all they need to do is plug Siri into the audio system, give it some vintage Brooklyn attitude and stories to tell, and we’ll all feel like we’re back in the personable olden days as we blithely cruise into the Era of the Robots — of both the floor-cleaning and back-flipping variety.

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