Ride-hailing giant Uber Technologies (UBER) has committed more than $10 billion toward buying robotaxis and purchasing stakes in their developers, according to the Financial Times. This marks a shift for Uber from its asset-light “gig-economy” business model as the company tries to avoid disruption from robotaxis.
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Trade TSLA with leverageUber Boosts Investments in Autonomous Vehicles
Based on analysts’ estimates and sources familiar with recent partnerships, the Financial Times calculated that Uber is on track to invest over $2.5 billion in equity stakes in autonomous vehicle (AV) makers and spend more than $7.5 billion on robotaxis over the next few years. Importantly, these investments are contingent on Uber’s partners achieving certain deployment milestones.
Uber has been aggressively entering into partnerships with several robotaxi providers, with plans to launch its robotaxi services in at least 15 cities in 2026. Some of the recent deals include partnerships with Rivian Automotive (RIVN), Lucid (LCID), and China’s Baidu (BIDU).
Specifically, on Tuesday, Lucid announced its expanded partnership with Uber, with the ride-hailing company now agreeing to boost its total investment in the U.S. electric vehicle (EV) maker to $500 million. Uber has increased its purchase commitment to at least 35,000 Lucid vehicles designed exclusively for its future global robotaxi service.
The significant investments Uber is making mark a key strategic shift away from its asset-light business model. Interestingly, the company sold its AV unit in 2020 in a $4 billion deal as part of its efforts to enhance profitability. While Uber is making massive investments in robotaxis to stay competitive amid rapid expansion by Alphabet’s (GOOGL) Waymo and Tesla (TSLA), the company will have to tread carefully, given that it turned profitable in 2023 after persistent losses.
Is UBER Stock a Buy or Sell Right Now?
Currently, Wall Street has a Strong Buy consensus rating on Uber Technologies stock based on 26 Buys and two Holds. The average UBER stock price target of $106.24 indicates about 47% upside potential.
