Uber Raising $1B, Optimus Primes NYC & Waymo Announces New Center

This Week In On Demand― March 21, 2019

This week, NYC gets its first autonomous shuttle service, more transit authorities are looking to ridesharing partnerships to fill gaps in service, and UberEats invests in real estate.

Self Driving Shuttle Coming to New York City

MIT-based company Optimus Ride is bringing New York City’s first driverless shuttle program to private roads in New York City. The shuttle provides rides for ferry passengers in the Brooklyn Navy Yard to an industrial center with over 400 businesses.

Current New York legislation allows autonomous vehicle testing and trials on roads with a permit from the DMV, but this permit is expiring next month. The loop shuttle service is different than autonomous vehicles operating on public roads. These vehicles carry multiple passengers and operate on the same route daily.

The public is generally opposed to autonomous vehicle programs on public roads, especially after Uber made headlines when one of its driverless fleet struck and killed an Arizona woman. By providing driverless vehicle services in private communities, Optimus Ride is working to change the public perception of autonomous vehicles. This smart move will hopefully pay off: they are also heading similar programs in private communities in Washington, DC and California.

ButterFLi Grant Provides Ridesharing Services to Disabled LA Residents

The LA Department of Transportation provided a grant to help Angelinos with accessibility issues get reduced fare rides in downtown LA. Ridesharing service ButterFLi provides rides during times when public transit services are not readily available. The grant allows eligible riders to receive $2 rides within an 8-mile service area eight times per month through FlexLA, a ridesharing pilot program.

As government transit authorities contend with aging fleets, high maintenance costs, and a lack of services during late night hours, partnering with ridesharing companies provide an easier alternative to handling services in-house. Though the current trend is to use larger companies like Lyft and Uber, smaller ridesharing companies like ButterFLi that win these transit contracts enjoy more consistent revenue and brand awareness.

Uber Raising $1B in Advance of IPO for Autonomous Program

In advance of its April IPO, Uber is in talks to raise $1 billion for its autonomous vehicle unit. Part of the money is likely coming from Softbank. The capital would provided a much-needed injection to the company, as many have questioned the progress in their driverless car program. TechCrunch estimates Uber has spent as much as $20 million per month on the program.

If Uber is able to raise the money, their autonomous vehicle program, which includes the Freight program that’s launching in Europe, would be valuated at $10 billion. The company itself is valuated at $70 billion, even with net losses up 32% quarter-over-quarter late last year.

Uber’s upcoming IPO gives investors an incentive to sink capital into the company. The move is a win for everyone; if the deal goes through before the IPO, it will make the company more attractive to buyers during the IPO.

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Waymo Opening New Fleet Center in Mesa, Arizona

Waymo is opening a new 85,000 square foot center to service its Waymo One self-driving cars in Mesa, Arizona.

The move makes sense since it began operating its on demand driverless car service in Phoenix in December. Business is booming for Waymo. They’ve received approval to open a manufacturing facility in Michigan and are allegedly in talks to open a driverless taxi service.

A survey from AAA shows that Americans are still uneasy about autonomous cars. 71% of respondents said they were afraid to ride in driverless cars.

Waymo provides a human backup driver in the car, which helps ease the fears of new riders. A report by the California DMV shows Waymo’s cars needed less human intervention in 2018 than prior years. With human intervention required once every 11,154 miles, Waymo’s cars are the safest. By continuing to encourage the use of on demand driverless car services, companies like Waymo can improve the perception of autonomous vehicles on city streets.

UberEats Investing in Real Estate for Food Delivery

A secret pilot program by UberEats in Paris shows the company is now in the real estate business.

Bloomberg reports the company is leasing vacant real estate and turning them into commercial kitchens for the sole purpose of food delivery.

The program rents these “ghost kitchens” to restaurants to use as satellite locations for food delivery only. The catch? UberEats provides the delivery services.

Uber isn’t the only one in the game. Former Uber CEO Travis Kalanick operates a similar company, CloudKitchens, part of a larger real estate company, City Storage Systems. The biggest difference is that CloudKitchens buys distressed real estate instead of leasing it. Unlike UberEats, which provides delivery service through its app, CloudKitchens customers have the freedom to use as many delivery providers as they choose. The service also provides labor at the locations, requiring restaurants to drop off food and CloudKitchens does the rest.

CloudKitchens is already operating in LA, with plans to expand into Chicago soon.

Not only does this provide a way for restaurants to expand operations without taking on the burden of opening a new location, new restaurant owners can enter into markets with less overhead.