Uber and Lyft Can’t Rely on Driverless Cars to become Profitable

With Uber and Lyft both announcing large quarterly losses last week, it’s clear they have a long way to go to reach profitability, and analysts are increasingly focused on the long-term viability of the industry.

One potential pathway is the advent and utilization of autonomous vehicles (AVs), which could reduce the single largest expense incurred by the ride-hailing networks: compensation to human drivers. However, just adding AVs to lower costs won’t be a silver bullet.

While margins are difficult to pin down, some data has shown city-level gross margins to be approximately 10%, meaning that a ride that costs a customer $2 would cost Uber UBER, -2.84% or Lyft LYFT, -3.17% $1.80 to provide, leaving them with a 20-cent gross profit.

https://www.marketwatch.com/story/basic-economics-means-uber-and-lyft-cant-rely-on-driverless-cars-to-become-profitable-2019-08-12