Ready or not, here they come. Tough luck for drivers.
Uber is desperate. Its business model may not allow it to ever make money as long as it has to pay human drivers, spend massive resources to recruit them, and deal with the fallout when they cause problems. So it has been furiously working on self-driving technologies. And now it’s taking a small-scale experimental program to the big league – not decades down the road but starting in 2019.
Volvo Cars, which is owned by China’s Zhejiang Geely Holding Group Co., announced today that it has signed a “framework agreement” to sell Uber “tens of thousands of autonomous driving compatible base vehicles between 2019 and 2021.” The announcement added:
Our aim is to be the supplier of choice for AD [autonomous driving] ride-sharing service providers globally. Today’s agreement with Uber is a primary example of that strategic direction.
Volvo will supply the XC90, a luxury SUV, which seats up to seven passengers:
The base vehicles incorporate all necessary safety, redundancy and core autonomous driving technologies that are required for Uber to add its own self-driving technology.
The XC90 has a starting MSRP in the US of just over $45,000. Some versions are already available today with self-driving features, such as collision avoidance systems for low-speed accidents and systems that keep the vehicle in its lane and maintain the proper distance to the vehicle in front.
Financial details were not disclosed. Uber is going to get a big discount for a fleet purchase of this size, but it will also have to pay extra for whatever autonomous driving technologies that Volvo might preinstall. So this is not going to be cheap. If Uber pays $40,000 per vehicle, a fleet purchase of 24,000 vehicles – the number now being kicked around – would amount to nearly $1 billion.
Volvo also said that it will continue to develop its own technologies to pursue “its own independent autonomous car strategy, which is planned to culminate in the release of its first fully autonomous car in 2021.”
Uber and Volvo have been working together on self-driving vehicles for a while. In August 2016, Uber started testing specially-equipped XC90 models in Pittsburgh, though they still had an Uber employee in the front seat. It expanded its testing to Tempe, Arizona, and California.
But tests were briefly halted after an accident in Tempe in March this year. A vehicle driven by a human driver failed to yield, according to Police, and slammed into the test vehicle. These incidents are trotted out to show how self-driving technologies don’t work, when instead they should be trotted out to show how human drivers don’t work.
Humans are terrible drivers. Human drivers in the US caused 40,000 traffic fatalities in 2016. Self-driving technology doesn’t have to be perfect. It just has to be a lot less terrible than human drivers. That’s the promise.
The agreement with Volvo “puts us on a path towards mass produced self-driving vehicles at scale,” said Jeff Miller, Uber’s head of auto alliances, cited in Volvo’s press release.
The first batch of vehicles will be built in Volvo’s assembly plant in Sweden. But Volvo is also gearing up to build the vehicles at its planned factory near Charleston, South Carolina. Uber will then add its own systems and software to the vehicles.
This announcement of a mass-production deal for autonomous vehicles – the first of its kind – still leaves a lot of vacant spaces to be filled, so to speak, but it shows confidence among automakers that autonomous driving can be achieved in a matter of years not decades, and it shows desperation at Uber that it must be achieved pronto for its business model to have a chance of being sustainable.
About a quarter of the $1.2 trillion in auto loans outstanding were granted to borrowers with a subprime credit score. Read… Auto-Loan Subprime Blows Up Lehman-Moment-Like
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