Uber Doesn't Rival Taxis But Personal Car Ownership: Analysts

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Uber's endgame isn't to rival taxis but the very concept of personal car ownership, Goldman Sachs technology analysts wrote earlier this month. The San Francisco, California-based startup has been committing significant resources to self-driving technologies not just because it wants to cut the operating costs of its existing business model but provide consumers around the world with a mobility solution that's more affordable than owning a car, whereas the possible demise of the taxi industry is just a side effect of that strategy, the analysts believe.

Uber Chief Executive Officer Dara Khosrowshahi implied as much during his recent talk at the latest Goldman Sachs-hosted tech conference held in San Francisco earlier this month, noting how personal car ownership still costs under a dollar per mile, whereas hailing an UberX sets a custom back at least $2.50 per the same distance. Having cars that can operate autonomously and don't require a driver on a paycheck will bring the cost of rides down, with Uber aiming to deliver a solution that's cheaper than $0.80 per mile, consequently convincing people that not owning a car and relying on ride-hailing will help them save money in both the short and long term. Some industry watchers are picturesquely describing Uber's business strategy as an attempt to turn the concept of personal car ownership into that of personal horse ownership; while rich people and some individuals living in rural areas still own horses, the majority of the modern society doesn't.

It's presently unclear when exactly Uber decided on its strategy shift but challenging the very notion of personal car ownership wasn't on the company's roadmap since its inception in 2009. Public hints at doing so started around the time Mr. Khosrowshahi took over the firm last August and have intensified in recent months. Increasing driver density, promoting carpooling, and replacing traditional vehicles with electric ones will all help Uber bring down the cost of its rides to a degree but cutting expenses to the point that hailing an Uber several times per day is more affordable than buying a car will require large-scale commercialization of autonomous driving solutions, most industry watchers believe. According to some estimates, self-driving taxis may be as much as 80-percent cheaper than hailing an UberX is today. The startup isn't just stopping at driverless vehicles and has recently been pursuing flying taxis, claiming it will be able to commercialize them in five to ten years.

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