Tuesday 17 January 2017

Uber sounds out carmakers on driverless cars

Edward Taylor and Harro Ten Wolde

Published 20/03/2016 | 02:30

Loss-making Uber would make drastic savings on its biggest cost - drivers - if it were able to incorporate self-driving cars into its fleet
Loss-making Uber would make drastic savings on its biggest cost - drivers - if it were able to incorporate self-driving cars into its fleet

Ride-hailing service Uber has sounded out car companies about placing a large order for self-driving cars, an auto industry source has told Reuters.

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"They wanted autonomous cars," the source, who declined to be named, said. "It seemed like they were shopping around."

Loss-making Uber would make drastic savings on its biggest cost - drivers - if it were able to incorporate self-driving cars into its fleet.

Volkswagen's Audi, Daimler's Mercedes-Benz, BMW and car industry suppliers Bosch and Continental are all working on technologies for autonomous or semi-autonomous cars.

On Friday, Germany's Manager Magazine reported that Uber had placed an order for at least 100,000 Mercedes S-Class cars, citing sources at both companies.

The top-flight limousine, around 100,000 of which Mercedes-Benz sold last year, does not yet have fully autonomous driving functionality.

Another source familiar with the matter said no order had been placed with Mercedes-Benz. Daimler and Uber declined to comment.

Auto industry executives are wary of doing deals with newcomers from the technology and software business, who threaten to up-end established business models based on manufacturing and selling cars. "We don't want to end up like Nokia, which was once hugely profitable... then disappeared," a second car industry source said about doing deals with Uber.

So-called 'autonomous vehicles' have for years been a distant dream but technology advances and a push by Google, with its huge financial resources, to introduce a prototype have shifted the race to build them up a gear.

Analysts at Exane BNP Paribas say they see a $25bn market for automated driving technology by 2020, with vehicle intelligence becoming "the key differentiating factor". But the brokerage does not expect to see fully automated cars until 2025 or 2030, due to regulatory hurdles.

In August 2013, Mercedes-Benz responded to the Google push by developing an S-class limousine that drove between the German towns of Mannheim and Pforzheim without any driver input. The 103 km stretch is known as the Bertha Benz route, named after the driver of the first-ever car around 130 years ago.

Earlier in the week, Mercedes' rival BMW said it was considering launching its own ride-hailing service in what would be a rival for Uber.

"The value creation is shifting from the actual hardware toward software and services," BMW's new chief executive Harald Krueger said.

© Reuters

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