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24 October 2018

Toyota invest in driverless Uber development

The rise of Uber has been prolific, so much so that the word ‘Uber’ has been adopted into everyday language. Recently, Uber struck a deal with Toyota for a USD500m (GBP387m) investment to streamline and scale up the development of driverless Ubers.

At first glance, Uber’s impressive growth rates seem sustainable. Consumer demands are simple: efficiency and low prices are key. More drivers and cars on the road reduce consumer costs. Uber has fended off competitors by investing in driver-based incentives and add-ons such as Uber Eats. However, this has led to issues of competition and driver welfare.

In the UK, there has been substantial publicity surrounding the difficulties black cabs face in maintaining their competitive advantage against Uber. This is exemplified by the ban on Uber in London which was successfully appealed. Some councils have imposed blanket Uber bans, which has not only had an adverse effect on Uber’s profits, but has also encouraged UK consumers to seek other taxi-cab alternatives.

The concept of Uber as a viable alternative to taxi-cabs has brought about consumer satisfaction internationally, but this comes at the expense of driver procedures in context of proper working hours and wages. Driverless Ubers eliminate the need for actual drivers but the scheme gives rise to the issue of passenger safety. This has been a recent focus of American news reports which have uncovered a number of fatal accidents reported during vehicle testing.

The investor appetite is fickle; though simple to please, investments are time-constrained as capital returns are key. In the UK, Uber faces a court appeal against its ban as well as the uncertainties surrounding  Brexit; whether it is successful in navigating these obstacles in an uncertain economic climate remains to be seen. Toyota’s investment appears positive: the exchange of know-how should hopefully iron out the wrinkles and provide a better offering to the end-user.

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