eBay: Car Service of the Future?

Uber’s trial of self-driving car-sharing in Pittsburgh has a lot of people excited, as well it should. The trial features some experimental Volvo XC90 SUVs with human monitors behind the wheel in case something goes wrong. The drivers are not allowed to talk to the passengers, who sit in the back seat and communicate with the car through a tablet. This isn’t the first trial of an autonomous taxi service: Singapore already has two firms operating them.

What’s the Next Step for Autonomous Vehicles?

Taxi service is unlikely to be the next phase in autonomous vehicles, however. Self-driving tractors have already been in use for several years. Tractors are an ideal test bed for autonomous vehicle tech because there are no roads to deal with and no traffic to avoid. They follow a very predictable route and have to operate with great precision, laying down seed with fractions of an inch of accuracy. Self-driving tractors can also deposit water, nutrients, and pesticides and can pick weeds and harvest crops, so they’re great labor savers that do a better job than humans in many instances.

I expect the next step for autonomous vehicles on public roadways will actually be delivery vehicles. This application is a slam dunk because the liability issues are so much less than they would be for human cargo. Autonomous package delivery will require some cooperation from the recipient, of course, so the first application is long-haul trucking. 18-wheelers drive from terminal to terminal, so that much of the infrastructure is already in place.

Package Delivery

Uber recently bought Otto, a company focused on self-driving freight trucks:

In July the company reached an agreement to buy Otto, a 91-employee driverless truck startup that was founded earlier this year and includes engineers from a number of high-profile tech companies attempting to bring driverless cars to market, including Google, Apple, and Tesla. Uber declined to disclose the terms of the arrangement, but a person familiar with the deal says that if targets are met, it would be worth 1 percent of Uber’s most recent valuation. That would imply a price of about $680 million. Otto’s current employees will also collectively receive 20 percent of any profits Uber earns from building an autonomous trucking business.

When combined with Uber’s human drivers, the package delivery service can go desk-to-desk instead of just terminal-to-terminal. With fully autonomous cars, Uber can presumably use some sort of drone to carry small packages from the car to the receiving docks of office buildings or the front porches of houses.

But what happens to Uber’s contractors? Autonomous vehicles mean the company will no longer need its minions, but it also puts Uber in the position of requiring capital to purchase cars to replace the ones it (effectively) leases from its drivers today. So a lot of part-time, gig economy workers will be out of work again, just like the taxi drivers they’ve replaced. And autonomous vehicle technology will become generic because Volvo doesn’t have an exclusive deal with Uber.

eBay Could Upend Uber

These two developments – employer-less drivers and driverless cars – and the capital requirement suggest that Uber will be in a position to disrupted by the next wave of innovation in cars. Uber today is simply a service that matches up drivers with riders, and such services are easy to create. When a substantial number of people own autonomous vehicles, there’s nothing to stop them from turning their cars loose to carry other people around while they’re at their desks, watching TV, or sleeping.

People who own regular cars might want to swap with those who have pickup trucks to carry large items home from the store, and those with off-road vehicles may want to lease them out to hunters and other sportsmen. So there’s a niche for company that does the sort of thing eBay does for transportation. eBay could add this service to their current offering a lot easier than the cars can be developed.

Imagine telling eBay where you want to go and asking available cars to bid for your business in an instant auction. You could choose a fancy car, a cheap car, a car that’s really close, or a carpool. If you have a car ready to go to work, you can set a price floor and leave her in the parking lot until the dollars get interesting. And you can make sure she’s back where you are when you need a ride if you’re set on riding in your own investment rather than somebody else’s. So transportation becomes a way to invest your money rather than a simple expense.

The Errandmobile

The ideal of a network of autonomous vehicles carrying either people or packages opens up some extremely attractive options as businesses adapt to the new technology. We can already shop online with in-store pickup from grocery stores and major retailers. Sending a driverless car to Safeway to pick up your groceries is not even disruptive: they already have people who carry groceries out to cars and put them in the trunk. Add a fridge to the trunk and you can pick up groceries while meeting with clients. Drugstores, fast food franchises, and liquor stores have drive through windows that can accommodate driverless cars without much change.

Perhaps the best thing about autonomous cars will be the convenience of attending to mundane errands without losing work time or breaking concentration to annoy yourself waiting in traffic. That’s the end of road rage.

This is a Good Time to be a Car Company

And it very well could be the case that driverless cars make car ownership so appealing that more people will buy more cars: big cars for long trips, fancy cars for dates, and tiny little cars for commuting and errands.

That’s tech progress for you. Company A disrupts Industry B only to be bypassed by Company C when Technology D comes out of the lab. When we’re using next-generation eBay to share other people’s autonomous cars and sending our own cars to work and to run errands, we’ll look back at today’s regulatory hassles over the Gig Economy with amusement.