The ride hailing app that is made to give you a ride that is much more affordable than a taxi has been working toward a way to finally turn a profit. Even though the Uber app is being used in cities across the country and around the world and there is even an upscale part of the company called UberBLACK the company has never turned a profit. This leads to the thought that Uber needs to find a way to cut costs and currently the cost it has is in the human drivers that carry the riders where they need to go.
The only way Uber is going to be able to eliminate the human element is to have autonomous vehicles in its fleet, which is a possibility, but one that is a long ways off. Currently what we see is more Uber drivers than ever to help give the company a chance at making some money, but the founder of Uber has already stated publicly that he would buy every Tesla vehicle ever made if they were all self-driven. Unfortunately for Uber, the legislation and technology for fully autonomous driving that doesn’t even require a person in the driver’s seat is still years away, so what does the latest action by Uber mean for the company?
The latest news from Uber and from Mercedes-Benz is that Uber has ordered 100,000 of the S-Class luxury sedan from the company. This is a car that typically retails for around $100,000 which would make this order worth $10 billion, which we can expect to be a little less because Mercedes-Benz certainly has offered Uber a discount for an order this large, but why is Uber buying so many and when are they expected to be delivered to the company?
The information we had previously was that Uber wanted to place a large order for fully-autonomous vehicles but that doesn’t seem to be a possibility until at least 2020. Unless Uber is waiting to see if Mercedes-Benz will be the first to the market in the S-Class, which is currently partially autonomous for short periods of time, this purchase doesn’t fit in line with what Uber claimed they wanted to do. The other possibility is to create a new arm of Uber that offers rental of the S-Class sedans as limousines that are rented at a much lower rate than many limo companies in various cities.
The difficulty here is the fact that both Uber and Mercedes-Benz have been tight-lipped regarding the details of the transaction, including the timeframes for expected deliveries. We can speculate all we want, but for a company that seems to have one expense, the human drivers, and has not turned a profit, it would seem logical that they would look for a way to eliminate their only expense. An expansion just might make them some money, or they could see if the UberBLACK riders will pay a little more if they knew the car they were riding in is an S-Class. I guess we will see in the future just what this purchase is all about, but there are a few serious options Uber can consider.
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