Automakers vs. Uber- Now That’s One Hell Of A Fight I Would Love To See

Car makers are rushing to invest in mobility services to capture the massive revenue from selling both vehicles and creating their own on-demand service in order to carve out a stake in the industry now dominated by Uber.

For one, Tesla seems to see the potential earnings as they think ride-sharing/hailing is the future of mass-market mobility. General Motors has made one of the biggest bet, investing $500 million in Lyft in January. GM's upcoming electric Chevrolet Bolt was designed expressly with car sharing in mind. Tesla lacks the deep pockets of GM all while the so called "ride-share service" companies like Uber and Lyft burn billions of dollars in price wars to secure regional dominance (or as I call it, "monopoly power" to dominate eventually the industry and raise prices to massive levels).

Tesla recently announced that all of its vehicles going forward will (eventually) have full self-driving capabilities. But buried in fine print of is website is a warning to customers who may be seeing dollar signs in Tesla’s new driverless upgrades (which won’t be activated for a few years). “Please note also that using a self-driving Tesla for car sharing and ride hailing for friends and family is fine, but doing so for revenue purposes will only be permissible on the Tesla Network, details of which will be released next year” This means that you will be able to use a Tesla, but not on the Uber network. Too bad for Uber, but I refuse to shed a tear for them. But back to the Tesla’s Network. So now Tesla is going one step further by combining the vehicle and the app network. Very interesting. Many are getting in on the action and rightly so. It’s a great industry that combines technology and transportation in a way never imagined a decade ago.

Seven years ago, just before Uber opened its business, the company was valued at exactly zero dollars. Today, it is worth around $68 billion. But it is not inconceivable that Uber, as mighty as it currently appears, could one-day return to its modest origins, worth nothing.  Some believe that the day when driverless cars become commonplace in America is largely a game of close your eyes and throw a dart at the board. I believe it will happen in two years or so while others suggest closer to 5 years. Given how many companies are working on this technology, and how quickly they are overcoming once seemingly immovable obstacles from safety concerns to legislation, the timetable is only shrinking. In some countries, these vehicles are already here. In Singapore a company called NuTonomy launched a fleet of self-driving taxis.

When these self-driving cars do become the gold standard and the rule rather than the exception, a new form of transportation in America will take place on a proportion no one could ever imagine. When that happens, society as a whole is also going to change First, very few people will actually own a car. Rather, most people will likely subscribe to them, or rent their usage, in the same way that we currently rent music or movies, which we enjoy in our living rooms but technically live in a far-off digital cloud. We will use apps or services that connect us with these cars, not too dissimilar from the way Uber works today. When this happens, however, our fundamental notion of vehicles—those things with a steering wheel and five seats—will change drastically. Cars will become experiences. Most importantly, Uber drivers WILL be out of business because Uber will no longer need drivers. This is why I keep saying to Uber drivers that they must wake up as they are creating their own demise and leading themselves down the ranks of the unemployed.

There are other benefits to no longer having to own a car. Parking, and all the headaches that come with trying to find a spot, or getting a ticket for not feeding the meter, will all vanish. Driveways in homes could become larger gardens. Speeding tickets and D.U.I.s could be eradicated. But if you think about it, Uber isn’t actually connecting passengers to cars. Instead, it is really connecting passengers to drivers. When those drivers are replaced by computers, Uber is a less important, and less valuable, middle man. The opportunity is open to a lot of other companies who are trying to not be erased by the approaching reality of autonomous vehicles. Everyone knows what happened to Polaroid when they failed to look ahead and keep up with technological changes.

This game change is emblematic of a far greater pattern spreading through virtually every industry. In the past, car manufactures competed with car manufactures. Now, in the same way that The New York Times competes with Instagram and Facebook for your time, car manufactures are contending with a slew of different kinds of companies from different industries. Uber is eager to hold on to its position and is currently working on a technology that augments vehicles, and is testing its own fleet of self-driving vehicles. Meanwhile, its competitors in this new, amorphous space include other start-up ventures; existing car manufactures (Ford, Tesla, BMW, Mercedes, among dozens of others); tech companies (Apple and Google); and several universities around the world. There is a vision of the world where every car company and every tech company has a version of Uber for driverless vehicles.

Driverless cars will change cities around America. It is going to be similar to 1999 when there was one Napster, and then a few years later there were 50 competitors. Uber is quite vulnerable because if Google doesn't beat them to the punch, they could be eradicated by Ford or Apple or one of those small start-ups no one has ever heard of.

If the car companies all create cars that can drive by themselves, what role does Uber or Lyft play in that transaction? They could continue to offer to connect cars to passengers, but in doing so, they will likely want a cut of the revenues that the carmaker gets from each transaction. It is unlikely that Google or Apple want to give Uber 20 percent of their profits. Neither would Elon Musk at Tesla, nor Mercedes or any other company for that matter. They will all simply want to offer their own app with their own proprietary service or subscription.

There are plenty of pros and cons that will come with the driverless-car age. Currently, over one million people die per year in motor vehicle accidents. Driverless-car may make auto related deaths an anomaly. Going to the DMV would be a thing of the past. Pollution would drop dramatically. Most of all, think of all that wasted time with your hands spent on the wheel.

Then there are the inevitable negatives. Hackers will surely try to gain access to cars and steer vehicles off roads, or worse, into other people. Privacy standards could be eroded even further in a society where corporations can track your habits through your smartphone clicks, but will now also have more detailed information about where you go. And maybe more frightening, an extraordinary number of jobs will be lost to these autonomous vehicles. Then there are the ancillary trades that support all of the people who earn a living by driving, including gas-station attendants, meter maids, Drivers’-Ed teachers, valets, highway patrol, delivery drivers, and—yes—people who earn a living driving for Uber. Anyone who drives a vehicle for a living will see their jobs disappear.

Uber already has an incredibly valuable advantage over Ford or Tesla because of its treasure trove of data, but, who knows how long that will last. It seems that Uber is surely to face the classic dilemma that stifles all big businesses as technology starts to attack them from the future: they must change in a way that eats away their core business, or someone else will. There are some businesses that can adapt quickly enough to the changes, and survive, and others that can’t. When Steve Jobs from Apple released the iPhone in 2007 he was fully aware that it would kill the iPod, which was a core part of Apple’s revenue. In doing so, he was able to thrust Apple forward to become the most valued company in the world. But then there are those that were not able to adapt, like Polaroid. While the camera-maker was once valued at billions of dollars, and fully aware that its business was about to be decimated by digital cameras, executives simply couldn’t adapt. That is the key in my mind ladies and gentlemen. Businesses in decline now or who are worried about the future must think outside the box and most of all figure out a way to overcome and adapt.