Self Driving Helps Uber To Make More Money

   Cost of car ( Toyota Prius ) with self driving system around $320,000 ( fully autonomous ). And that's more expensive than Ferrari California. However, that's definitely worth it.

   First of all, let's say Uber will use self driving car for 15 years. As well, the cost will be $320,000 / 15 / 12 = $1,777 monthly. Also if we add gas, maintenance and insurance expenses. The total cost definitely will reach $2,800 monthly. However, that's going to be cheaper in the future.

   In addition, Uber driver can make $20 per hour in San Francisco. Some of them work 8 hours a day as full time 5 days a week. However, self driving car could work more than 8 hours. Let's say 12 hour a day at least ( maybe more because that is robot ! ). Which means it could make around $7,200 monthly ( $20 x 12 hrs x 30 day ).

   Moreover, if we want to calculate gross profit margin from self driving technology. That will be ( $7,200 - $2,800 ) / $7,200 = 61.1 % ( but now Uber gross profit margin is 25% and Uber drivers take 75% !! ).

   Furthermore, in the future Uber can make gross profit margin around 60% !. Let's say Uber will spend 20% into ( marketing , employee's salaries , R&D ... etc ), 20% net profit margin and 20% discount for customers.

   Last not least I did research about cost of ride with Uber from Downtown Berkeley to Downtown San Francesco ( From my experience using Uber in the Bay Area from 2014 until 2017 ).

UberX : $30
UberPOOL ( at the beginning 2016 ) : $15
UberPOOL ( Mid-2016 ) : $7 ~ $10
UberPOOL Ride Pass ( 2017 ) : $4 ~ $8
UberPOOL ( Maybe in the future after using self driving with 20% discount ) : $3.2 ~ $6.4
If you use BART ( public transportation ) : $4 and it takes 45 minutes

Therefore, Uber will be lower price and faster!.

Also my point of view about Uber valuation for IPO could be around $130B ~ $195B . From the numbers: Uber revenue in 2016 was $6.5B. Also If we use P/E ratio 20x and 30x. As a result Uber valuation could be around $130B ~ $195B.

Finally, cost of self driving technology especially fully autonomous will be more affordable in the future also cheaper. That could save customers a lot of money. Also more profitable for Uber and Lyft.


Note: This blog was written in 2017 but it was published in 2019.