Apr 3, 2019

Don’t count on driverless cars to fix Lyft’s profitability struggles

Illustration: Sarah Grillo/Axios

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.

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.

Go deeper

Italy reports lowest number of new coronavirus cases since February

Italy’s aerobatic team Frecce Tricolori fly over Milan in Duomo Square on May 25. Photo: Francesco Prandoni/Getty Images

The Italian government reported 300 new cases of coronavirus on Monday, the lowest daily increase since Feb. 29.

Why it matters: Italy, the first country in Europe to implement a nationwide lockdown after emerging as a hotspot in March, appears to have finally weathered its coronavirus outbreak. Italy has reported nearly 33,000 total deaths, the third-highest total behind the U.S. and U.K.

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 2 p.m. ET: 5,453,784 — Total deaths: 345,886 — Total recoveries — 2,191,310Map.
  2. U.S.: Total confirmed cases as of 2 p.m. ET: 1,651,254 — Total deaths: 97,850 — Total recoveries: 366,736 — Total tested: 14,163,915Map.
  3. World: Top Boris Johnson aide defends himself after allegations he broke U.K. lockdown — WHO suspends trial of hydroxychloroquine over safety concerns.
  4. 2020: Trump threatens to move Republican convention from North Carolina — Joe Biden makes first public appearance in two months.
  5. Public health: Officials are urging Americans to wear masks over Memorial Day.
  6. Economy: White House economic adviser Kevin Hassett says it's possible the unemployment rate could still be in double digits by November's election — Charities refocus their efforts to fill gaps left by government.
  7. What should I do? Hydroxychloroquine questions answeredTraveling, asthma, dishes, disinfectants and being contagiousMasks, lending books and self-isolatingExercise, laundry, what counts as soap — Pets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingHow to minimize your risk.
  8. Other resources: CDC on how to avoid the virus, what to do if you get it, the right mask to wear.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

Updated 1 hour ago - Politics & Policy

Joe Biden makes first public appearance in over two months

Photo: Oliver Douliery/AFP via Getty Images

Former Vice President Joe Biden made his first in-person appearance in over two months on Monday to honor Memorial Day by laying a wreath at a Delaware veterans park, AP reports.

Why it matters: Biden, the Democratic Party's presumptive nominee, has taken the unprecedented step of campaigning from his home during the coronavirus pandemic, ever since canceling a rally in Cleveland on March 10.