Published - October 10, 2022 @ 12:10 PM (EET)
Last week, Uber Technologies (NYSE:UBER) inked a 10-year deal with Motional, a joint venture between Hyundai Motor Group and Aptiv that offers driverless rides and enables food deliveries through its ordering service using Motional's new all-electric IONIQ 5-based robotaxis.
The deal, which Uber and Motional plan to launch robotaxis across the US over the next decade, marks the return of Uber to the business after having sold its self-driving unit in 2020 to Aurora Innovations.
The partnership comes after Uber made a deal in late September with Dutch automaker Stellantis (NYSE:STLA) to add more electric vehicles to its service in France.
WHY IT MATTERS
The latest agreement demonstrates Uber's renewed interest in autonomous driving technology after shelving its high ambitions for self-driving cars to cut costs during the pandemic.
Before selling its autonomous vehicle unit, Advanced Technologies Group, ATG, which Uber launched in 2015, had made significant progress building and testing systems, deploying pilots in cities including Toronto, Washington, and San Francisco.
The unit, however, struggled amid a lawsuit filed by Waymo and a fatal crash involving one of its test vehicles in March 2018.
While Uber's stock took quite a beating during the stay-at-home period, the news brought renewed investor optimism, with shares of the ride-sharing giant rising nearly 6% over five trading days last week.
NOW WHAT
Motional, which began operating autonomous food deliveries for Uber Eats customers in California earlier this year, has been well received by customers.
The tie-up thus positions Motional to become the first AV company to offer both delivery and ride-hail services, creating the opportunity for effective broad AV adoption by pairing its advanced driverless technology with Uber's network of millions of customers.
President and CEO of Motional, Karl Iagnemma, said,
"Motional now has unparalleled access to millions of riders and a roadmap to scale significantly over the next ten years. We're proud to partner with Uber to bring both driverless ride-hail and deliveries to life in cities throughout the US."
Worth noting, however, while the ride-sharing industry is in a far better place than it was during the pandemic, Uber remains historically unprofitable.
PRICE TARGET: Consensus among analysts is a Strong Buy based on 25 ratings covered by Tipranks (22 Buys and 3 Holds). The average price target of $46.25 implies an upside potential of 64.77%.
