One thing I’ve been meaning to do for quite some time now is visit San Francisco. Not so that I can go to see the Golden Gate Bridge only to find it covered by clouds EVERY SINGLE TIME. IYKYK.

I want to go there once to experience sitting in a Waymo. San Francisco is one of the few places where you can catch a ride in Waymo’s own self-driving service, giving a glimpse into what the future of transportation looks like.

But while Waymo is carving out its space in San Francisco, it raises a bigger question: how do autonomous vehicle companies fit into the broader ride-hailing landscape? As the Autonomous Vehicle (AV) industry gains traction, it's worth analyzing how Uber’s business model fits in this new world - and how AV companies can both benefit and compete with Uber as they grow. 

Here’s the roundup:

• Uber’s Self-Driving Strategy

• Asteroids ☄️

• Trending Tools ⚒️ 

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Uber’s Self-Driving Strategy

Uber’s vision is simple: Grow the marketplace to include both human drivers and fleets of self-driving cars, tapping into them wherever and whenever it's available. Uber isn’t picky about who owns the AV, as long as it's there.

I also think the best go-to-market strategy for AVs isn't by launching their own ride-hailing platforms - it's by hopping into the passenger seat with someone who's already driving, like Uber. 

Why, you ask? 

One simple word: SCALE 

Autonomous cars are expensive - like really expensive. The only way to make the economics work is to keep them running around the clock. According to public data, nearly 40% of Waymo’s miles driven from Sept 2023 to May 2024 were without passengers. 

These cars can literally drive 24*7 by virtue of their autonomy and thus, the more these cars are on the road, the better their unit economics get. 

After all, they don't need breaks, sleep or snack runs. 

This is where Uber comes in. With millions of daily rides, Uber offers a level of scale and velocity that would take these AV companies a lot of time (and a lot of money) to build on their own.

And that's what is happening as well. Uber has partnered with over 10 AV companies, including Waymo. While Waymo runs its own ride-hailing service in San Francisco, if you're looking to catch a Waymo in cities like Los Angeles or Phoenix, you'll need to open the Uber app.

Uber’s Current Market Position

Uber’s strategy makes sense, given its business model. Uber's business is a perfect example of the winner-take-all dynamics of the Aggregation Theory by Ben Thompson. 

The company that can digitize the hardest problem - in this case, connecting riders with drivers - will not only win the market but continue to attract more supply and demand as it scales. And they ultimately have pricing power. 

Uber wants to use the same strategy in autonomous driving. However, one feature of aggregation theory is the commoditization of supply. In the case of Uber, one driver on the platform is the same as the next - so if someone leaves, it barely leaves a dent. 

Sure, Uber wants to reduce driver churn as a whole, but no individual driver has any negotiating power over Uber. But that might change when we talk about AV supply.

In this new setup, Uber will essentially run two fleets:

1. Human Drivers

2. Autonomous Vehicles

But unlike their decentralized network of human drivers, Uber’s AV fleet will rely on a few specialized “Super Suppliers” like Waymo and Cruise. What happens then?

The Cannibalization of Uber?

As Uber would be aggregating a handful of autonomous vehicle suppliers rather than millions, the power dynamics would shift on a relative basis from Uber to these super specialized suppliers. 

Let’s take Waymo and Cruise, for example. Not only would they act as suppliers for Uber, bringing their fleets to the platform, but they’re also competitors - both for their self-driving technology and any future possible ride-hailing services they might start. As these AV companies gain brand recognition, they could redirect some customers away from Uber and onto their own apps. 

What happens to this model as autonomous vehicles become more common? 

1. Human drivers might become a smaller percentage of the supply (even if overall supply increases).

2. The AV companies could start siphoning off customers directly to their own platform.

3. They could also withhold supply that’s not profitable to them.

4. They could start charging a higher commission from Uber. 

Did we just witness the inevitable death of Uber? 

Hold on a Second

This is for the most part, a GROSS oversimplification of what is going to happen. Most of these “self-driving cars taking over Uber” scenarios imagine a world where millions of autonomous vehicles magically appear everywhere immediately. More realistically, building that many cars is going to take both a lot of time and money.

Plus, self-driving cars aren’t going to work everywhere Uber operates. High costs and limited adaptability mean Uber is well-positioned to bundle autonomous rides with its traditional human-powered fleet. This way, self-driving technology can roll out gradually in areas where it makes sense, while riders still have the option to get wherever they need to go.

Unlike Uber’s core ride-hailing market, the AV landscape won’t be winner-take-all. Between the high costs of scaling hardware and the maze of regulatory approvals, there will be room for multiple autonomous players—and that’s actually a plus for Uber.

What Uber needs are many suppliers, not just one or two. Relying on a single source of AV supply would give suppliers too much leverage, potentially squeezing Uber’s profits to zero. Instead, Uber should partner widely, staying open to anyone with a self-driving fleet.

In the long run, Uber’s real power lies in its network. The more AV providers it works with, the better Uber can drive competition between suppliers and maintain its place as the go-to marketplace for ride-hailing—whether human-driven or autonomous.

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