Uber Abandons Self-Driving Trucks

While Alphabet (GOOGL) (GOOG) and General Motors (GM) seem to get most of the credit for autonomous driving services due to Waymo and Cruise, Uber isn't one to ignore.

After all, bringing autonomous driving to a ride-hailing service like Uber could unlock tremendous gains. When the company introduced Uber Freight and then bought Otto for some $680 million in 2016, it seemed that autonomous trucking would eventually be a segment for Uber, too.

The moves made sense. Its current drivers are the biggest cost for ride-hailing companies like Uber. Take out the largest cost and Uber can charge less for customers and (hopefully for investors) make more money. On paper, it's reasonable and its autonomous trucking ambitions follow a similar outline.

However, that seems like its not in management's plans anymore. The company announced that it will shutter its autonomous trucking efforts as it will now only focus on autonomous driving.

Everything with Uber has been mired on controversy. Don't forget that Otto, the company Uber bought, was started by Anthony Levandowski, the former Google engineer who was sued by its former employee. He was later fired from Uber, too. Waymo and Uber have had legal spats as well.

Leaving Uber's past management team and business practices out of the discussion still doesn't avoid controversy. Earlier this year, the company's self-driving test program hit and killed a pedestrian.

To say that Uber's autonomous driving efforts have been a cakewalk would be a bold-faced lie. However, it remains an important ambition for the company, particularly with GM, Ford Motor (F) , Waymo and now Daimler (DDAIF) and Bosch entering this race after selecting Nvidia (NVDA) as its main building block.

Uber has made a global name for itself in the ride-hailing business, so its focus on autonomous passenger cars makes sense. Although one has to be somewhat surprised following its notable acquisition and quite frankly, all the money left on the table in terms of potential.

Simply put, while we dream about an autonomous car that can drive from Chicago to Detroit or Boston to New York while we recline back and nap or watch Netflix (NFLX) , there's serious coin to be made in trucking. Reducing freight costs, while boosting margins and efficiency and selling the necessary hardware is a win for all companies involved.

So the fact that Uber is bowing out of that race is surprising to say the least. The read-through? Either the concept is still a ways into the future, there isn't as much money to be made as it seems or Uber simply felt it had to choose between autonomous trucking and autonomous driving and went with the latter.

It leaves the door open for companies like Tesla (TSLA) , as well as suppliers and manufacturers to become the leader in autonomous trucking.

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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.

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