Huge News -- Uber Taps Cruise in Autonomous Driving Expansion

Cruise can focus on the tech while Uber brings the customers.

Author

Travis Hoium
August 22, 2024

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It’s been a huge week for autonomous driving — one of the themes I have invested heavily into in Asymmetric Investing. Earlier this week, Alphabet-owned Waymo announced a custom-made robotaxi that’s already in testing and today’s news was even bigger.

GM-owned Cruise announced a partnership with Uber, following a Waymo partnership that’s been rolling out in a few cities in the U.S. This puts Cruise on equal footing with Waymo in many ways and increases the distribution channel for autonomous driving technology.

As I said on Sunday, I’m out most of this week, but this was such big news I want to share what we know so far. In the next few weeks, I’m going to do a deep dive into autonomous driving and where I’m investing for the future of robotaxis.

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Uber Taps Cruise

From the joint release from Cruise and Uber:

Uber Technologies, Inc. (NYSE: UBER) and Cruise, two companies revolutionizing transportation, today announced a multi-year strategic partnership to bring Cruise autonomous vehicles to the Uber platform.

The companies plan to launch the partnership next year with a dedicated number of Chevy Bolt-based autonomous vehicles. Once launched, when an Uber rider requests a qualifying ride on the Uber app, they may be presented with the option to have that trip fulfilled by a Cruise autonomous vehicle.

One of the outstanding questions about autonomous vehicles is how they will be deployed. One theory is the vehicle in your driveway will be capable of full autonomy and could one day be a robotaxi generating revenue.

Another theory — that I prescribe — is that custom, dedicated robotaxis will be deployed by companies like Cruise, Waymo, and Zoox. Uber could be a step in that direction.

A Win For Uber

Uber has built a phenomenal business matching riders with drivers. However, founder Travis Kalanick knew the ultimate goal was to provide cheaper transportation through fully autonomous vehicles. However, Uber was unable to develop the technology in-house for several reasons, including a trade secret settlement with Waymo and a fatal accident. In 2020, the unit was sold to Aurora.

In partnering with both Waymo and Cruise, Uber hopes to become the aggregator of autonomous vehicles. They control the demand (riders) and supply becomes a commodity.

This could be the winning strategy, depending on how the industry plays out.

A Win For Cruise

Cruise is looking to deploy more vehicles as it rolls out brand new Chevy Bolts next year and one heavy lift would be building the rider network. Uber comes with the riders, Cruise can focus on tech and expanding supply.

This is a win — for now. What’s not clear is if Cruise will become a commodity to Uber or if it will be able to build its audience and leverage that brand loyalty to grow the fleet.

If Uber doesn’t commoditize Cruise and Waymo, this could be the start of building a great business.

Today’s announcement is a first step. There’s a long way to go before this becomes the TRILLION DOLLAR business I think it can be.

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Disclaimer: Asymmetric Investing provides analysis and research but DOES NOT provide individual financial advice. Travis Hoium may have a position in some of the stocks mentioned. All content is for informational purposes only. Asymmetric Investing is not a registered investment, legal, or tax advisor or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.

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