Analysts reset Uber stock forecast after General Motors deal

What’s all the fuss about?

If you live in San Francisco’s South of Market neighborhood, you may have heard the noise from the seemingly incessant honking of self-driving vehicles.

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More precisely, we are talking about Alphabet-backed (GOOGLE) Waymo robotaxis blowing their horns in a parking lot in the middle of the night.

Waymo’s white Jaguars are programmed to beep when they sense a nearby car might be backing into them.

A Waymo spokesperson said the company has updated the software, which “should keep the noise down for our neighbors moving forward.”

Autonomous vehicles have made all kinds of noise on their slow, often bumpy journey to mainstream acceptance.

However, a study by the Autonomous Vehicle Industry Association published in April found that AVs have driven nearly 70 million miles on public roads in the US, the equivalent of 293 round trips to the moon or over 29,000 times on route 66.

“From trucks to robotaxi to driverless delivery vehicles, we’re seeing a 59% increase in self-driving miles driven since the last time this figure was reported nine months ago, which is a testament to the growth and success of the industry,” Jeff Farrah, the representative of the group. CEO said. “And that number is growing every day.”

Drivers, on the other hand, don’t seem to feel any love for the robotic rides. A survey by the American Automobile Association found that nine out of ten drivers were either fearful or unsure about driving fully autonomous vehicles.

Dara Khosrowshahi, CEO of Uber Technologies Inc. Photographer: David Paul Morris/Bloomberg via Getty Images

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Uber CEO: We’re the ‘indispensable partner for AV players’

“Recently, there have been several well-publicized incidents where AV technology has failed, and that has some people concerned about surrendering full control of the system,” said AAA Idaho Director of Public Affairs Matthew Conde , in a statement.

“A progressive rollout of proven technologies will be key to getting drivers more comfortable with the idea of ​​a fully autonomous car,” he added.

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Despite the fears and technical headaches, companies are pressing ahead with autonomous vehicle plans.

adze (TSLA) is scheduled to unveil its Robotaxi on October 11, after the world’s largest electric vehicle maker scrapped the original August 8 event.

Last month, owned by Amazon (AMZN) Self-driving vehicle company Zoox has announced that Austin, Texas, will be its fourth public test site. The cars will also run in Miami, Seattle, Las Vegas and the San Francisco Bay Area.

On August 22, Cruise, of General Motors (GM) AV company and transportation platform Uber (UBER) jointly announced a multi-year partnership starting next year that will allow Uber riders to choose a ride using an autonomous Cruise vehicle.

Uber has been offering driverless cars in Phoenix on its platform since October through a partnership with Waymo. Waymo has about 700 vehicles in its fleet and is the only US firm to operate an unmanned robot axle that collects fares, according to Reuters.

“Cruise is on a mission to harness driverless technology to create safer streets and redefine urban life,” Cruise CEO Marc Whitten said in a statement. “We are excited to partner with Uber to bring the benefits of safe, reliable and autonomous driving to even more people, unlocking a new era of urban mobility.”

Uber CEO Dara Khosrowshahi said his company “can play an important role in helping bring autonomous technology safely and reliably to consumers and cities around the world.”

Khosrowshahi hinted at the partnership during the company’s recent earnings call when he said Uber is “in late-stage discussions with AV players globally to join our platform and we will have more announcements in the weeks and months next”.

“Uber can deliver enormous demand without AV players having to invest capital in acquiring customers or building the marketplace technology that delivers reliability to the standard consumers have come to expect,” he told analysts on Aug. 6. “This means Uber will be an indispensable partner for AV players of all kinds.”

In a recent interview, Khosrowshahi expressed reservations about Tesla’s plan, saying it’s “not clear” to him that the average Tesla owner would want their car “hated by a complete stranger.”

He also said that allowing Tesla owners to rent out their cars for taxi services will make it difficult to manage the “peaks and valleys” associated with supply and demand.

Cruise is conducting supervised tests — where the AV drives fully by itself, but with a human safety driver behind the wheel — in Phoenix, Dallas and Houston

California authorities revoked Cruise’s license to drive driverless vehicles in October after one of his robots hit a pedestrian after she was hit by another vehicle and dragged her 20 feet.

Meanwhile, the National Highway Traffic Safety Administration closed one of two investigations into the performance of the cruise vehicles after the company agreed to a recall.

The administration said in filings posted on its website that it reviewed 7,632 reports of hard braking and found 10 crashes with four injuries. No accidents were associated with improper stopping.

Analyst: AV competition good for Uber

Cruise agreed to recall all 1,194 robotic axles for unexpected braking and said it fixed the problem with a software update.

The company said it disagreed with NHTSA’s conclusion that a recall was necessary, but agreed to do so to resolve the investigation.

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NHTSA is still investigating reports that cruise vehicles struck pedestrians on or entering roadways, including crosswalks.

Cruise’s CEO resigned last year, and GM subsequently announced plans to cut spending on self-driving units.

Several analysts have issued research reports following news of the Uber-Cruise partnership.

Bank of America Securities analyst Justin Post said the addition of Cruise “reinforces the concept” that fleet operators, or possibly individual AV owners, will want to take advantage of Uber’s demand aggregation to increase asset utilization.

The Post, which has a buy rating and $88 price target on Uber shares, said AV competition is “good for Uber’s potential long-term economic partnership” and argued that Tesla and Amazon’s AV investment “could be a long-term net positive”.

RBC Capital maintained an outperform rating on GM after announcing the multi-year strategic partnership.

The news affirms RBC’s claim that Tesla will be a robotaxi player among others even in the US and highlights the value of Uber’s app, the firm said.

RBC said it assumed the vast majority of robotaxi revenue would come from an “assortment of players,” not just Tesla. The news also affirms GM’s commitment to autonomy, “which we applaud,” the firm said.

GM stock “rarely gets credit” for Cruise, and RBC analysts wondered if that could change, especially with all the fanfare surrounding Tesla’s Oct. 10 unveiling of its robo-taxi.

KeyBanc analyst Justin Patterson said the partnership between Uber and Cruise brings another large autonomous vehicle operator to the Uber platform and gives Uber users in new geographies access to self-driving vehicles.

Patterson said he sees this as a positive indication of Uber’s value to self-driving companies, the establishment of a hybrid network of ride-hailing services, and likely the first of several announcements Uber hinted at in its Q2 earnings call.

The analyst said investors are skeptical that Uber can work with Tesla, but pointed to past partnerships as a sign that the companies can work together.

He said he remains “open-minded” at Tesla’s Oct. 10 event.

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