At the Q2 earnings call, Uber Technologies (UBER) CEO Dara Khosrowshahi confirmed that the ride-hailing company is in active talks with private equity firms and major banks to secure funding to expand its robotaxi business. According to the CEO, the company is confident that once the revenue model is proven, financing will be readily available.
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Khosrowshahi outlined three business models for Uber’s robotaxi strategy, which include paying partners a fixed rate for vehicle use, sharing revenue with fleet operators, and owning vehicles while licensing self-driving software.
Currently, Uber is using a “modest” portion of its nearly $7 billion in annual cash flow to fund initial deployments. The company may also consider selling minority stakes in its ventures to finance the expansion.
UBER Betting Big on Robotaxis
This move reflects Uber’s long-term bet on autonomous mobility as a trillion-dollar opportunity. Importantly, the push follows Uber’s $300 million partnership with electric vehicle maker Lucid (LCID) and autonomous tech startup Nuro, aimed at deploying over 20,000 robotaxis over the next six years.
These vehicles will be integrated into Uber’s platform, joining existing collaborations with Alphabet’s (GOOGL) Waymo in cities such as Austin and Atlanta.
The race to build robotaxis is heating up, with Tesla (TSLA) and Waymo also trying to grab the market share. Some believe driverless cars could cut costs and help boost profits for ride-hailing companies, such as UBER. However, the technology still faces regulatory hurdles and doubts from the public.
Is UBER a Buy or Sell Right Now?
Turning to Wall Street, analysts have a Strong Buy consensus rating on UBER stock based on 31 Buys and four Holds assigned in the past three months. Further, the average UBER price target of $103.63 per share implies 17.26% upside potential.
