By Deborah Lawrence
You pick up your cell phone and open the Uber app. Within minutes a car drives up to collect you. You can even choose the color of the vehicle. You hop in and off you go. Sounds simple and it is. It has also been one of the most disruptive events in decades. Ask any New York City cab driver! Now just imagine if Uber were to get disrupted itself within the next five to ten years!
If you said “no way”, you’re probably right because it looks like Uber has already identified this risk and taken measures to position itself…maybe even for further disruption.
The Tesla Model S can go from 0 to 60 in a breathtaking 5.1 seconds. Soon it is rumored that it will take a mere 2.8 seconds. It has a sleek though somewhat conventional design. I mean, c’mon, it’s a sedan. And no doubt all these attributes were carefully thought out to help us navigate the fundamental changes occurring in the energy and transportation markets as we speak. When change comes too fast and in too exotic a package, there is a risk that it won’t catch on. Hence an elegant simple sedan. Albeit one that thrills you the moment you touch the accelerator. Google and Apple, too, are building electric cars. Which brings us to the point. Are these cars or glorified computers on wheels?
The lines are blurring in the energy, transportation and technology markets? It used to be so simple. A car was a car. Electricity came from nat gas or coal fired generation. And thermostats were simplistic devices that did nothing more than alter the temperature of your home. Not any more.
Technology has now entered these markets and the interesting thing about technology is that a.) it becomes cheaper with scale and b.) it can be designed to complement other technologies creating virtuous circles. For instance, Solar City will put DG solar on your roof, a battery pack in your garage and Tesla will park an EV next to the battery pack. The three technologies together enhance each separate technology and make it that much more cost effective and useful. Each encourages consumers to use more of the others. That can mean big profits for companies.
The Google EV is a funny looking squished up VW Beetle-esque podcar. And yet, pundits are already talking about disruption. So how could it ever be disruptive? Well, it’s a driverless car and according to Business Insider:
“Once the driver isn’t required to drive the car, the “automobile” can finally live up to its name and mobilize autonomously. If you need to get somewhere in a car, you summon one using some type of GPS-enabled technology, a Google Car arrives, its drives you where you need to go while you do something else, and it hums away once you arrive at your destination…Repeat as necessary.”
It’s Uber without a driver! Hence the next stage of potential disruption from Uber.
Owning a car is not the most efficient or cost effective means of transporting ourselves. It makes much more sense to have fleets or driverless cars such as Google envisions to take us where we need to go. We already know how efficient and quick Uber is. The model works albeit with a driver at present. But this is probably not the way of the future. So what has Uber done? They have joined up with Chinese electric vehicle maker BYD.
Uber has entered into an agreement with BYD to test electric cars in the US. BYD’s most famous investor is Warren Buffett. But perhaps much more interesting than that is the fact that BYD has been working on an autonomous vehicle. That’s right, just like the Google car. And this would be of obvious value to Uber.
In February, 2014, BYD announced a joint laboratory agreement with I2R, a Singapore company. The press release stated:
“…I2R is very proud to be able to attract BYD, one of China’s largest companies specializing in electric vehicles to invest heavily in Singapore and jointly develop more than one hundred electric cars with autonomous capabilities. With I2R’s expertise in the autonomous vehicle technologies, coupled with BYD’s vast experience in electric vehicles…we hope to benefit the transport industry…all over the world.”
Uber has teamed up with a EV dealer in Chicago to offer BYD’s e6. The e6 is a four door electric sedan perfect for taxis. This is a win, win for UberX drivers, the dealership and the city of Chicago at the moment. According to Car and Driver:
“…[BYD] partnered with Uber and the dealer since the city offers $10,000 rebates to taxi fleets that purchase EVs, on top of a $4000 rebate from the state of Illinois.”
But it also positions Uber to be ready for the autonomous vehicle transition. Given that estimates are for this to happen within the next five years, Uber’s joint venture with BYD is timely to say the least. A few years hence, we may open that app and drive home in an electric vehicle that has no driver.