Toyota invests half a billion dollars in Uber to save both companies

Japanese car maker Toyota has invested $500 million dollars to expand its collaboration with ride-sharing company Uber in autonomous driving cars.

After putting a brake on its self-driving car tests earlier this year, Uber has entered a new phase of collaborating with car makers as exemplified by this venture. Both companies will contribute their respective auto-driving technologies, as well as Uber’s ridesharing and Toyota’s car making expertise, to a new purpose-built Toyota Sienna Minivan. The new fleet produced out of this collaboration will not be owned by either company. Instead, according to the press releases, “the mass-produced autonomous vehicles will be owned and operated by mutually agreed upon third party autonomous fleet operators.”

This is not the first auto-driving partnership with car makers Uber has entered. Daimler, Volvo and others are also on its roster. It is not even the first time it worked with Toyota, but it is the first time that the collaboration is taking the such a form, so that the venture becomes a supplier to other service providers.

This may not amount to an outright divestiture of the autonomous driving business that Uber investors have been crying for, it nonetheless will help alleviate the financial pressure on the Uber management in the run-up to the planned IPO, without pulling out of one of the most important long-term, strategic areas in the automobile industry.

“The deal is the first of its kind for Uber, and signals our commitment to bringing world-class technologies to the Uber network,” said Dara Khosrowshahi, Uber’s CEO. “Uber’s advanced technology and Toyota’s commitment to safety and its renowned manufacturing prowess make this partnership a natural fit.”

This sentiment is echoed by Toyota. “This agreement and investment marks an important milestone in our transformation to a mobility company as we help provide a path for safe and secure expansion of mobility services like ride-sharing that includes Toyota vehicles and technologies,” said Shigeki Tomoyama, president of Toyota Connected Company, and executive vice president of Toyota Motor Corporation.

This is more than a symbolic move, as neither Uber nor Toyota is leading in autonomous driving. Actually neither of them is leading in either of the two strategic growth areas in the car industries, the other being electric vehicles (EV). While Tesla makes all the headlines in EV, it is the Chinese car makers that are selling far more EV and hybrid cars than anyone else.

When it comes autonomous driving, the disruption actually came from outside the automobile industry, with Waymo (owned by Google’s parent company Alphabet) being the leader (with whom Uber settled a dispute earlier this year). Tesla and Uber are following closely, though the traditional car makers have also heeded the wake-up call.

This kind of disruption from other than the usual suspects is nothing new to those of us who have followed the mobile telecom industry. Smartphones were introduced by companies traditionally associated the computer industry (Apple) and Internet (Google), which ultimately rendered names like SonyEricsson, Motorola, HTC, and Nokia obsolete.

In another interesting development, Finland’s Technical Research Centre (VTT) recently joined forces with Nokia to invest in a driverless “robot car” using the 5G network to be rolled out. It looks the once disrupted mobile telecom company is aiming to bring disruption to the automobile industry. The first targets are reporting weather conditions on the road as well as real-time road maintenance data analytics. Longer term, with a fleet of “robot cars” on the road under a well rolled out 5G network, VTT’s “5G-Safe” project, which “robot car” being part of, will aim to deliver a new use case of 5G to the transport industry.

The road to autonomous driving is quickly getting crowded and noisy.

Uber urged to sell self-driving unit; are investors stupid or greedy?

Just as transportation disruptor Uber unveils its financials for the latest quarter, investors have reportedly been pressing the management team to sell-off its self-driving unit, a move that’s either short-sighted or short-termist.

According to The Information, with losses piling high in the self-driving unit, reportedly $125-200 million a quarter for the last 18 months, investors are recommending the management team sell off assets and focus on the here and now. It doesn’t matter that self-driving cars are the future, or that the potential to kill Uber as a business lies in technology, investors don’t want the losses on the spreadsheets anymore.

In terms of the cash being spent on developments in the self-driving unit, it is a notable hole to fill. Even with Uber increasing revenues 51% year-on-year for the quarter to $2.7 billion, it is a lot. However, those who are suggesting the firm ignore the self-driving euphoria clearly don’t understand this is not a choice; for Uber to survive in the long-run, self-driving cars have to be a priority.

Uber exists today because it was a major disruptor to a long-time established area of society. It made taxis accessible once again, using technology to address pain-points, firstly, the complications of finding a car at 2am and, secondly, the price. Those who benefited from the status quo protested the presence of Uber, though the consumer was thrilled. In a cash-conscious society, offering a good service for less will always be a popular idea.

This is why investments in self-driving vehicles is imperative at Uber. If it doesn’t nail the self-driving experience, someone will come along and disrupt the market. Uber and similar services will soon become the status quo in Western societies, and self-driving cars will become the norm at some point in the future. This point might not be for five or ten or even twenty years, there are a lot of parallel hurdles, but if Uber is not ready with its own proposition, it will decline in popularity quickly.

Removing drivers is the next step to make the taxi service industry cheaper and more attractive to the consumer; it will happen, the only question which remains is when. For Uber, it is a case of disrupt or be disrupted. It has benefitted from a technology revolution in the taxi segment, and the next one is clear.

The investors who are calling for the sale of the self-driving unit are either short-sighted, unable to recognise trends in the industry, or short-termist, simply seeking a pay-out over the next couple of quarters with no eye on long-term interests. Neither is a particularly attractive description.

Deregulation in Finland: Uber Black may be back, but UberPOP is popped, again

Finland’s new Act on Transport Services has opened its taxi market to competition. 90 per cent of taxi rides in the future are expected to be booked on mobile apps, estimated the authorities.

To call Finland an expensive country to live in is a fair comment. To say hiring taxi in Finland is expensive is an understatement. The country had rigid restrictions on cab fare and high entry barriers which have fended off competition. Uber was banned from operating in 2017. Uber drivers’ earnings were confiscated, and its country manager’s assets were seized by Helsinki district court.

This all changed on Sunday 1 July, when the new Act on Transport Services came into effect. It did away with regulated fares, lifted the cap on the number of taxi licences to be issued, and loosened requirements on cab driver qualification. Trafi, the traffic safety agency told the media that its online platform received more than 700 applications for permits to operate taxi service on the first day the new law became effictive. The authorities are taking on additional staff to process the applications and permits will be granted within a day or two.

All this may spell good news for Uber. Drivers holding a permit will be able to take business on the Uber app, providing the so-called Uber Black service. However, because the law specifically requires drivers to apply for permit, UberPOP, which enables unlicensed drivers to provide rides, and has been at the heart of Uber’s legal issues with authorities in different parts of the world, will continue to be banned.

The direct beneficiaries of the new law are the customers, who will have more choices and will likely enjoy more competitive fares. But the deregulated market also opens a new business opportunity for the technology industry. There are more than a dozen taxi hiring apps in Finland now, including Uber, and more are expected to be launched. This is not sustainable. It would not be too much of a stretch to see aggregation and price comparison apps coming to the market. They will be the customer facing front end, and can take a cut from every ride booked on the platform, similar to what Skyscanner does for air travel and Booking.com does for hotels.

Uber sets sights on emerging markets

Uber has launched a more data-friendly version of its popular ride-sharing app to target emerging markets, starting in India.

Uber Lite is a reduced version of application, which works on any network and any android device, which is only 5MB the equivalent of three selfies. The core functionality of the app has been retained, though many of the bells and whistles (which we try our best to ignore) have been removed during the efficiency mission.

“We continue to see exponential growth outside of the U.S., and are thinking a lot about building for the next hundreds of millions of riders who we hope will choose Uber to get around,” said Shirish Andhare, ‎Head of Product for Emerging Markets. “That’s why today, we’re introducing Uber Lite: built in India, designed for the world. Uber Lite is a simple version of the rider app that saves space, works on any network, and on any Android phone.”

Part of the challenges with the app will be adapted the service for those in areas with spotty connectivity. One solution is for the app to decide where the driver picks you up, with a number of designated pick up points. Popular destinations are also cached, while the team is also boasting about machine learning capabilities which should personalise the service, both of which could streamline the process of booking a ride but the practicalities remain to be seen. The map function has also been removed, which is an interesting idea.

The pilot will be launched over the next couple of months, with new markets being targeted later in the year.

Uber says driving in Arizona is too dangerous but flying in France is fine

On one side of the Atlantic Uber is pumping R&D funds into making flying taxis a reality, but on the other an internal memo states it is shutting down testing of self-driving cars following the death of a pedestrian in March.

Starting in France, the team has announced plans to open a new Advanced Technologies Center in Paris, which will focus on bringing flying taxis into the world. UberAir is the business unit working to build a network of Vertical take-off and landing (VTOL) aircraft, and while it might sound incredibly exciting for adrenaline commuters, it might be a few years until we are soaring. First and foremost, the process begins with building artificial intelligence and airspace management systems to support uberAIR at scale.

Paris will be the centre of development for the moment, capturing a $20 million investment to make the dream a reality, but Uber has said it would like to demonstrate the technology in Dallas, Los Angeles, and a third, international city by 2020. The Advanced Technologies Center Paris (ATCP) will open will opened in the Autumn, with the recruitment drive for engineering, machine learning, and computer vision talent currently underway. Research will focus on capabilities across airspace management, autonomy, real-time communication networks, energy storage, and charging systems.

Aside from being a demonstration of how rapidly the technology industry is evolving, it also supports the idea of France surging up the technology global rankings. The research centre will certainly be something for President Macron to boast about, as will yesterday’s announcement which saw IBM pumping cash into the French technology scene. Macron has made it a priority to drive France forward as a centre of technology excellence, ultimately aiming to stimulate the start-up community across the country, and the presence of two technology heavyweights certainly adds credibility to the mission.

Elsewhere in the Uber world, the story is not as promising. Following the death of a pedestrian in an incident involving one of Uber’s self-driving vehicles, the team suspended operations, however an internal memo seen by ARS Technica this week confirms Arizona operations will be permanently shut down.

“We’ve made the tough call to wind down operations in Phoenix,” Eric Meyhofer, Head of Uber’s Advanced Technologies Group, wrote in the memo. “As you know, there’s been a public call for the suspension of our self-driving program on Arizona’s public roads and we have decided to refocus the bulk of our efforts in our engineering hubs in San Francisco and Pittsburgh. This is the best path forward as we work to get back on the road as soon as possible.”

As Meyhofer states, this is not the end of the self-driving programme, the team are focusing on talks with officials in Pittsburgh about resuming operations, as well as with California Governor Jerry Brown, the California DMV and the cities of San Francisco and Sacramento. Future tests will be scaled back, taking a more considered approach to development, the memo also notes.

Looking at the financial side of the business, Uber has been briefing investors on its Q1 performance which brought in $2.6 billion, according to Reuters, an 8% sequential increase and a 73% boost from the same period in 2017. When sales of its Southeast Asia business to Grab and its Russia business to Yandex, the company lost $312 million, down from $775 million in the previous quarter and $598 million 12 months ago. How attractive spreadsheets will look in a couple of months’ time remain to be seen, the team are battling various governments around the world over working conditions and employee holiday pay for example, but Uber is starting to look like a company which could actually make money.

Arizona suspends Uber autonomous car testing indefinitely

Following the recent fatality caused by a self-driving vehicle being tested by Uber in Arizona, the state Governor has suspended his permission to do that sort of thing.

Governor Doug Ducey has a fair bit of political capital on the line over this, having rolled out the red carpet to autonomous vehicle testing in 2016. The Associated Press seems to have been the first to report on Ducey’s decision but 12 News managed to get hold of his letter to Uber CEO Dara Khosrowshahi, which you can see below.

 

 

This seems to be a simple piece of damage limitation, in which a politician that had previously positioned himself as pro-technology is now wary of being associated with a negative turn of events.

The more interesting development may be a more general distrust of autonomous vehicles seeping into the broader technological and regulatory environments. Intel, for example, immediately moved to blog about how important to sort this stuff out and many AV stakeholders will be keen to limit the reputational damage to their industry.

Uber suspends self-driving projects after fatality in Arizona

Uber has put all activities involving self-driving vehicles on-hold after one of its vehicles reportedly failed to stop or slow enough before hitting and fatally injuring a 49 year-old pedestrian.

The incident occurred at around 10pm local time on Sunday night in Tempe, Arizona, according to ABC15. The vehicle was in self-drive mode with a safety operator behind the wheel when it struck a woman walking with her bicycle on the pavement, several yards away from a crossing point. The local police force has said the driver was not impaired and is co-operating with the investigation.

“Our investigation at this time did not show at this time that there were significant signs of the vehicle slowing down,” an officer said to local press.

This is not the first time Uber has had to pause it self-driving efforts. During March last year, a Uber vehicle was struck pulling out of a junction after an on-coming vehicle failed to slow. This vehicle, which ended up on its side, was also in self-driving mode bringing into question the hazard-perception decision making capabilities of Uber’s AI components.

With this incident perhaps the most worrying aspect is the fact there was no reaction from the vehicle. It should be worth noting these are early days of the investigation, but early evidence indicates the vehicle was not doing enough to slow itself down. Considering this Volvo SUV has two dozen cameras, sensors and radar devices, all of which contribute to building a 3D map of the surrounding environment, something has gone seriously wrong.

The National Transportation Safety Board (NTSB) has confirmed it will be handling the investigation, which could have a wider impact on the development of the technology. The investigation will address the vehicle’s interaction with the environment, other vehicles and vulnerable road users such as pedestrians and bicyclists, led by Investigator-in-Charge Jennifer Morrison and three investigators.

While safety and efficiency are the long-term objectives of the technology you have to question whether we’re moving a bit too quickly. In October, Waymo said that it was not far away from figuring out the last challenges, but there was a problem with the vehicle turning left into oncoming traffic safely. At the time little was thought of such reports, but now the inability to perform basic tasks questions whether the vehicles should be on the road in the first place.

Governor Doug Ducey is another who has been facing criticism from local media after signing an Executive Order in August 2015 to allow testing of the autonomous vehicles on the roads of Arizona, though part of this might be a bit of scapegoating. The order states that ‘an operator shall have the ability to direct the vehicle’s movement if assistance is required’, therefore the bigger question should probably be around what went wrong in the vehicle as opposed to legislation to allow for the testing of new technology.

Last month at Mobile World Congress in Barcelona there was another step-up in the number of self-driving demonstrations perhaps indicating the industry was progressing. Incidents like this simply show the technology is still in the early days and we should not expect autonomous vehicles on the roads in the near future.

Uber introduces taxis for patients in the US

Uber has unveiled its latest initiative which will be known as Uber Health in a bid to bring mobility to the health sector.

The theory is relatively simple. The team claims 3.6 million Americans miss doctor appointments each year due to unreliable transportation, while no-show rates in some corners of the US could be up to 30%. Healthcare organizations will be able to order rides for patients going to and from the care they need.

“We’re unveiling a new service focused on an issue vital to all of us: health,” said Chris Weber, GM of Uber Health on the company’s blog.

“Every year, 3.6 million Americans miss doctor appointments due to a lack of reliable transportation. No-show rates are as high as 30% nationwide. And while transportation barriers are common across the general population, these barriers are greatest for vulnerable populations, including patients with the highest burden of chronic disease.”

Coordinators working for the healthcare organizations will be able to schedule individual appointments for patients, caregivers and staff, or repeat rides for those who need it. All the tasks can be managed from a centralized platform, while there is also the option for patients to communicate via text. This is an important note, as it is not guaranteed older patients will have a smartphone.

While this is certainly an interesting idea, it might have limited success. Firstly, it would be limited to markets where the healthcare is driven by insurance. Any healthcare organization will order the rides and will most likely include it in the customer’s bill at the end of the procedure or treatment. It is tough to imagine organizations like the NHS, which is already pretty cash-strapped, forking out for Uber rides for its patients, unless there were exceptional circumstances.

Secondly, if one of the basic ideas for the service is that public transport is rubbish, this might be a bit of an oversight. How many of those in the US who can afford healthcare insurance are reliant on public transport? They will have their own vehicles, or able to order their own. This might be a service reserved for the caregivers or as a value add service, as opposed to becoming a standard and integral part of the healthcare experience.

It is an interesting idea which might make Uber a bit of money, but we can’t see this having more than a very minor impact on the healthcare space.

Uber looks to autonomous vehicles as solution to employment law issues

Uber has become infamous in recent months for all the wrong reasons, so in retaliation for being told how to treat people with a basic level of compassion, it has decided to accelerate autonomous vehicles.

In an interview with Bloomberg at Davos, Uber CEO Dara Khosrowshahi has made two bold claims. Firstly, the company will be profitable within three years, and secondly, autonomous vehicles will be part of the fleet within 18 months. It is a big statement to say Uber will have commercially active autonomous vehicles on the road in that time, but a lack of details will certainly help the CEO here.

Firstly, lets deal with the profitability one. Uber claims it is trimming the losses it is making each month, but many news outlets reported the latest quarterly earnings were north of $1 billion. CEOs have to be ambitious, but trying to reverse a loss of billions of dollars annually to a profit within three years is a big ask.

Of course, should Khosrowshahi be able to do away with those pesky employees, it would be a lot easier. This leads us very pleasantly onto the second claim made by the blue-sky thinking Khosrowshahi. Autonomous vehicles within 18 months.

This is of course a heavily hedged claim which was light on detail. Under ‘perfect’ conditions, an autonomous vehicle could operate in the near future. These ‘perfect’ conditions would be where the route has been perfectly mapped, while also taking into account other factors such as weather. In places like Phoenix, where Uber has been testing autonomous vehicles, this could be 5% of journeys within the 18 month time frame.

Of course, autonomous vehicles are all about the data which is collected in the city itself. Once you have mapped the city perfectly the first hurdle has been conquered. Considering the number of vehicles it has in the major cities of the world, there are few companies who are in a better position to accurately map the environment. Monitoring these vehicles will also collect information on how an autonomous driving programme should react to certain situations.

In theory, Khosrowshahi is right. His worldwide fleet could be collected all sorts of information to train AI to drive, but we are highly sceptical about whether there will be autonomous Uber vehicles operational in 18 months, even in rare circumstances, or the five year target Khosrowshahi seems to have set for wider usecases. From a technology perspective, we might be ready, but the other cogs are unlikely to have been aligned.

The insurance industry will have to have a major reform, cellular connectivity will have almost ubiquitous coverage, laws will have to be changed, councils will have to get better at planning and communicating work, consumer attitudes will have to change and there are countless other parallel challenges which are out of the reach of software engineers.

We can imagine autonomous vehicles will be on motorways or major highways sooner than some think, but these usecases will only be ones where pedestrians aren’t. As soon as there is an opportunity for unpredictable behaviour, regulatory restrictions will take years to change. Ultimately, autonomous vehicles will not be present in the cities until this question can be answered:

An autonomous vehicle is driving down the street when a six year old child runs into the path of the vehicle. The vehicle is moving at such a speed that stopping prior to a collision is not a possibility. Does the vehicle:

  1. Swerve right into a wall and injure, potentially fatally, the person in the vehicle
  2. Swerve left and hit, potentially fatally, an elderly couple walking along the pavement
  3. Continue onwards and hit, potentially fatally, the young child

Technology is only one part of the question when you are trying to get autonomous vehicles on the road. Until this question can be answered, and agreed, the world will not be comfortable handing over control to a machine.

Khosrowshahi might be pinning his hopes on Uber profitability on the introduction of autonomous vehicles and the removal of humans (along with their minimum wage and holiday pay requirements), but we cannot see much credibility to the timescales he has put forward.

Uber dealt regulation blow by European Court

Uber has been dealt another blow in the courts, with the Court of Justice of the European Union ruling the firm should be considered a taxi company and therefore subject to those rules.

While such a ruling is not necessarily a massive surprise, some might have been hoping it went the other direction. Uber will absorb the majority of the damage dealt here for the moment, though there could be wider consequences for other companies which operate in the increasingly influential ‘gig economy’.

The ruling is as follows:

“In today’s judgment, the Court declares that an intermediation service such as that at issue in the main proceedings, the purpose of which is to connect, by means of a smartphone application and for remuneration, non-professional drivers using their own vehicle with persons who wish to make urban journeys, must be regarded as being inherently linked to a transport service and, accordingly, must be classified as ‘a service in the field of transport’ within the meaning of EU law.

“Consequently, such a service must be excluded from the scope of the freedom to provide services in general as well as the directive on services in the internal market and the directive on electronic commerce. It follows that, as EU law currently stands, it is for the Member States to regulate the

conditions under which such services are to be provided in conformity with the general

rules of the Treaty on the Functioning of the EU.”

Uber will continue to exist, and it will probably continue to be favoured by the vast majority as it currently is, however the impact will be seen on the operational side of things. For instance, minimum wage will now be considered a factor in the business, as will holiday pay for drivers. Uber has continually tried to define itself as a technology company, nothing more than a facilitator of relationships through an app, and therefore not subject to stricter regulations which treat drivers as more than a commodity. This ruling will banish this mindset.

What this ruling is perhaps more evidence of is governments and regulators struggling to get to grips with the digital landscape. Internet companies such as Uber have often fallen foul of regulators around the world, as they often manage to operate around traditional regulation. Perhaps this ruling should not be considered 100% correct, as Uber is the square peg being forced by the regulators into a round hole. Uber needs to be held accountable to certain transportation rules, but it reality a wider reform to make regulations more suitable for the connected economy is needed.

Uber has seemingly been the poster boy of disruption and chaos around the world, but in truth it isn’t the only one. AirBnB operates a similar business model, reliant on relationships rather than direct products and services, but has a much more tolerable reputation. That said, it has been the subject of protects in places like Barcelona.

Wherever a new idea emerges which gains mass market traction in such a short period of time there will be resistance. Those who’s business and livelihoods are disrupted by the change will try to slow or halt it. What we are currently seeing are people who have yet to adapt to the digital economy, while also governments who are struggling to understand how to regulate the new world.