Think about this for a second: Uber is worth more than General Motors. That’s right, a company that makes nothing, owns nothing, and has yet to turn a profit is, according to the arcane math of the financial mavens who deal in such ephemera, worth close to $70 billion. GM, which last year manufactured and sold a record 9.8 million cars and trucks around the globe, earning $152 billion, has a market capitalization of about $48 billion.
Perhaps we shouldn’t be surprised. Facebook, called the world’s most popular media company, creates no content and is valued at about $360 billion. So, too, is Amazon, a retailer that carries no inventory. Airbnb, the world’s largest accommodation provider, owns no property and is worth $24 billion. The value of nothing? Quite a lot, it seems.
Of course, what makes all these companies worth so much is not hardware but software; they are digital platforms able to connect huge numbers of people and collect a lot of information about them. What makes Uber different, though, is that the commodity it trades—transport—is itself about to become a digital platform as automakers develop autonomous vehicles.
Autonomous vehicles might represent an existential threat to some automotive brands, but someone is still going to have to design, engineer, and build self-driving cars and trucks. And despite what you may be hearing about vehicles coming from Apple and Google, the fact is today’s automakers—those battle-hardened veterans of the world’s most complex and cutthroat industry—own those skills. The coming of autonomous vehicles will change the auto industry’s business model. But it will also change Uber’s.
Autonomy might represent a threat, but someone still has to design, engineer, and build self-driving cars and trucks.
With minor variations, the auto industry still fundamentally follows the model set up by Henry Ford in the early 20th century. Ford saw himself in the business of making cars, not selling them—well, not selling them to consumers, at least. He made Ford dealers pay for cars the moment they rolled out the factory door. Getting Mr. and Mrs. America to pay for a Model T was their problem, not Henry’s.
Uber CEO Travis Kalanick says his company’s goal is to make ride-sharing so cheap and convenient that it becomes an alternative to owning a car. But automakers are now saying the same thing. Current Ford boss Mark Fields recently committed the Blue Oval to building a fully autonomous vehicle specifically aimed at ride-sharing. Earlier this year GM’s Mary Barra spent $1 billion on a software startup called Cruise Automation, invested $500 million in Uber rival Lyft, and installed a GM exec on the ride-sharing company’s board.
“We see a move from ownership to usage,” confirms Volker Mornhinweg, who heads Mercedes-Benz Vans. Now, commercial vans aren’t a sexy part of the business, but they make automakers a lot of money, so a lot of smart minds are focused on their future. “The van of the future should know what’s loaded inside it, where it’s headed, and when it’s expected,” he says. “It will be like a commercial hub on wheels, like a node in a digital network of the internet of things.” Think Uber meets Amazon.
With automakers actively contemplating allowing consumers to pay to use vehicles rather than own them, planning to leverage their dealer networks for vehicle maintenance and customer support, and developing their own fleet management and vehicle use apps, where does that leave Uber? Ironically, probably in the same place as every other automaker in the autonomous age, owning its own fleets of autonomous vehicles. The company has just signed a deal with Volvo to co-develop a baseline vehicle that each company will then further develop in line with their respective philosophies on autonomous vehicle capability and functionality.
Uber will become part of the very industry it’s disrupting. And when it does, will it still be worth more than GM?
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