Alejandro Jimenez Rico @MrKnoot: "🚗 𝗧𝗵𝗲 𝗨𝗯𝗲𝗿 𝗔𝗩 𝗕𝘂𝗹𝗹..."

United Kingdom

🚗 𝗧𝗵𝗲 𝗨𝗯𝗲𝗿 𝗔𝗩 𝗕𝘂𝗹𝗹 𝗖𝗮𝘀𝗲 𝗛𝗮𝘀 𝗮 𝗛𝗼𝗹𝗲 𝗶𝗻 𝗜𝘁. The hottest debate in mobility investing isn’t about $UBER (Uber Technologies Inc.)’s take rates. It’s about whether autonomous vehicles will destroy the company or supercharge it. The bull case sounds elegant: Uber trades “dirty” 30% human take rates for “clean” 20% AV take rates. Lower headline, higher margins. Insurance and driver incentives disappear. Uber becomes the aggregator sitting atop a fragmented AV ecosystem, extracting rent from $TSLA (Tesla Motors, Inc.), $GOOGL’s Waymo, and everyone else. One problem. The thesis depends almost entirely on that fragmentation actually happening. 𝗧𝗵𝗲 𝗨𝗻𝗶𝘁 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰𝘀 Uber’s 30% take rate is inflated by pass-throughs: insurance and incentives that show as revenue but get paid out immediately. Strip those away and contribution per ride is thin. With AVs, the operator carries insurance, no driver bonuses. A “lower” 20% take rate might be more profitable per trip. 𝗛𝘂𝗺𝗮𝗻: $30 fare → $9 revenue → ~$5 costs → ~$4 contribution 𝗔𝗩: $30 fare → $6 revenue → ~$1 costs → ~$5 contribution Lower revenue, higher contribution. The math checks out if Uber keeps that 20%. 𝗧𝗵𝗲 𝗦𝘁𝗲𝗲𝗹𝗺𝗮𝗻 Even if AV supply consolidates, Uber might hold value. Consumers will pick whichever app has faster ETA or lower price. Uber bundles mobility with Eats and membership. And Uber provides real value: demand smoothing, payments, fraud prevention, dispatch optimization. Having an app is easy. Owning the habit is hard. And Uber currently owns that habit. But that’s as far as the bull case goes. 𝗪𝗵𝗲𝗿𝗲 𝗜𝘁 𝗚𝗲𝘁𝘀 𝗦𝗵𝗮𝗸𝘆 The steelman assumes AV operators will always pay 20% for Uber’s demand. But that math changes at scale. $TSLA has explicitly stated they’ll run their own robotaxi network. Waymo already has its own consumer app, and a pretty popular one already. Most riders in SF and Phoenix download Waymo One directly. These aren’t startups desperate for distribution we’re talking about. They’re backed by mega-cap balance sheets. Morgan Stanley recently published a model that predicts Uber will capture ~22% of US AV trips by 2032, with Waymo and Tesla eating up most of the rest. That sounds pretty terrible for Uber. And that still is, if you ask me, the optimistic scenario. 𝗧𝗵𝗲 𝗙𝗿𝗮𝗴𝗺𝗲𝗻𝘁𝗮𝘁𝗶𝗼𝗻 𝗚𝗮𝗺𝗯𝗹𝗲 The key here is this: If ten AV companies compete for Uber’s demand, Uber holds leverage. If two dominate and go direct, Uber’s in trouble. So the question investors need to ask themselves is this: Will the market evolve towards fragmentation or towards consolidation? In my opinion, structural forces point toward consolidation: operating AV fleets require billions in R&D, they hold huge data network effects, and are constrained by city-by-city regulatory moats. That sounds to me like the natural behaviour of this market is towards consolidating itself into a handful of operators. What Uber’s doing about it is actually pretty clever. They’re putting a lot of money into funding small AV players. They’re backing $AMZN’s Zoox, partnering with WeRide, and funding a gazillion small projects in AV. All clearly trying to favour a more fragmented market. But that’s not the whole story. 𝗙𝗮𝗿𝗲 𝗗𝗲𝗳𝗹𝗮𝘁𝗶𝗼𝗻 There’s another dimension: what happens to the fare itself? If AVs slash cost per mile, competition pushes fares down. Uber could keep 20% and earn fewer dollars if fares compress from $30 to $18. The question isn’t just “20% or 10%?”. It’s “20% of what?” 𝗧𝗵𝗲 𝗕𝗼𝘁𝘁𝗼𝗺 𝗟𝗶𝗻𝗲 Two variables matter: AV speed and supply structure. → Slow AV + fragmented: Uber wins → Slow AV + consolidated: Uber’s okay, cash cow → Fast AV + fragmented: Uber wins big → Fast AV + consolidated: Uber squeezed The honest bull case isn’t “AV economics favour Uber.” It’s “AV timelines are slower than feared, I’ll take the cash flows while dust settles.” That’s defensible. Autonomy has been “two years away” for a decade. But betting Uber becomes *the* aggregator of a fragmented AV world means believing Uber can manufacture market structure through capital deployment. Structural forces point in the opposite direction though. So Uber’s skill at capital deployment is now more crucial than ever. If you’re long $UBER, know what you own: a bet on delayed AV timelines, not favourable AV economics.

Not investment advice. The author may have financial interests in the mentioned instruments.

2 Mentioned

TSLA

Tesla Motors, Inc.

UBER

Uber Technologies Inc.

Strictly Necessary Cookies

Performance Cookies

Functional Cookies

Targeting Cookies