It’s no secret that startup ride-share company Uber has had some trouble lately, having lost somewhere in the hundreds of millions of dollars trying to keep their competitive edge. They’ve recently lost their CEO, COO, and CFO, and investors are looking rather bleakly at their projected losses.
The company’s losses ended up sending them into a crisis just a year after they had been valued at $100 billion. It was supposed to “disrupt the auto industry” in the same way that Tesla was, the article from Buisness Insider states.
But even though Uber is suffering some setbacks, some people are still holding out hope that Tesla will save the industry.
Self-driving cars have long been an idea of Tesla CEO Elon Musk, who now plans on creating a fleet of self-driving cars that are also for ride-sharing purposes, and they could be a way for automakers to keep the industry alive.
After a decade of record breaking sales, many are saying that the industry has peaked and that it will now start a slow decline.
Tony Huges, the Managing Director of Moody’s Analytics, has argued that it isn’t the cars themselves that will lead to the decline of the auto industry, but the ride-sharing services like Uber or Lyft.
“Our bold prediction is that if ride-sharing companies become truly huge, they will seek to buy vehicle manufacturers and shift research and development efforts firmly in the direction of cost reduction and reliability,” he says.
The idea that cars will start to only be seen as a method of transportation will be the reason that they end up declining, Hughes told The Street.
“The nature of the vehicles by my reasoning will be that they become more homogeneous where ride-sharing is everywhere. If [vehicles are all for] ride-shares, there’s no room for investment, for niche vehicles. You imagine the taxi fleet; taxis are very homogeneous. If ride-sharing becomes 100% of all journeys — no privately owned vehicles — that trend would be very bad for car makers. It means that their product would become commoditized. As a general rule, businesses want to maintain that their product is special. If something becomes a commodity, it means they lose the ability to charge excessive prices…That’s less profit.”
Already, luxury cars and brand new vehicles are not making the list for many consumers today. In fact, the most frequently searched for price range for a used car is about $5,000 and under.
Hughes said that one of the ways to survive the loss of demand for niche markets of luxury cars and the loyalty that comes with that is to combine into a single entity with ride-sharing companies.
Tesla’s master plan to “save the industry” outlines a mobile app that allows car owners to put their cars into a ride-sharing model to make money when they’re not in them. It also mentions that Tesla will start operating a fleet of its own to meet demand in cities where transportation is not sufficient.