Lyft — and now its shareholders — are banking on robotaxis to replace high-priced drivers and help turn ride-hailing into a profitable enterprise. Don't count on it.
The big picture: Creating and deploying a robotaxi service is an expensive proposition — pegged by one AV company at $5 billion to $6 billion for the vehicle, the AV technology and the fleet operations and maintenance.
- Even with partners to share the burden, those added costs would likely offset any savings from the elimination of human drivers, experts tell Axios.
What's happening: Lyft's initial public stock offering — likely to be followed by an Uber IPO within weeks — is a measure of investors' faith in the company's growth prospects.
- Lyft's newly listed stock surged to nearly $89 after its $72 debut last Friday, but has plummeted since then.
- Lyft's shareholder prospectus frequently touted its ambitious long-term AV aspirations — including a broad range of ride-hailing and transportation scenarios over the next 5–15 years.
- It's hard to know if the stock's decline is tied to skepticism about AVs in particular or ride-hailing in general.
Details: Lyft said it has a two-pronged strategy to bring AVs to market.
- Its open platform lets AV developers use their vehicles to fulfill rides on Lyft's network, gaining insights into ride-hailing networks. In Las Vegas, for example, auto tech supplier Aptiv has deployed a fleet of automated BMWs (with a safety driver) on the Lyft network, providing 35,000 rides since January 2018.
- Meanwhile, in Silicon Valley, Lyft is working with another big supplier, Magna, to jointly develop full self-driving technology. The team includes more than 300 engineers and robotics experts, a Lyft spokesperson says.
- Magna can share their co-developed technologies with other customers, an arrangement Lyft says will accelerate the introduction of self-driving vehicles and "democratize" access to the technology.
Yes, but: Lyft already loses massive amounts of money — $911 million in 2018 — even though it's the epitome of an "asset light" business, with neither cars nor drivers on its books.
- It's not clear, even with an influx of more than $2 billion from its IPO, how Lyft will fund future AV investment and whether it can sustain continued losses in the meantime. The company declined to elaborate on its strategy.
- Uber has similar challenges, but Softbank and Toyota are in talks to invest $1 billion in its AV unit, which could alleviate some pressure.
- Larger, better capitalized companies are already succumbing to the investment hurdles by pooling their resources: like Daimler-BMW, GM-Honda and VW-Ford.
The bottom line: Perhaps Lyft is betting that more AVs on the road — from any automaker — will fuel growth in its ride-hailing network. But the company is not saying much so it will be up to investors — and customers — to decide.