Uber has reportedly ordered at least 100,000 autonomous S-Class Mercedes Benz cars, a move that comes as the ride-sharing service makes continued efforts to enter the self-driving car industry.
The company, despite dominating the ride-sharing service field, doesn't have a fleet of cars of their own. Rather, it relies on contracted drivers to use their own cars to ferry people around, making this move all the more curious. So what gives? Outside of saving money, what would Uber want to do with Mercedes? As it turns out, both companies have one crucial thing in common: they've both invested heavily to make automated cars a reality, something not expected to become a reality until at least 2020.
For Uber's part, the company raided Carnegie Mellon University last year in search of its brightest software engineers. In this case, CMU's National Robotics Engineering Center was the perfect target. Not only did members of the staff possess the technical know-how needed to develop cars that could see and steer themselves, but a new facility where Uber would be working was close by. When all was said and done, Uber poached 40 researchers and scientists, leaving one of the world's top robotics research institutions in a pickle, so much so that Uber felt inclined to donate $5.5 million to the institution later that year.
Similarly, Mercedes has been working for the past few years on building autonomous driving technology into its street-ready vehicles. In 2013, the car-maker designed an S-class limousine that was able to park and maintain safe distances from other cars in tight, stop-and-go traffic without any driver on the German streets of Mannheim and Pforzheim. Alongside this has been a partnership between Mercedes and Nokia to develop 3D smart maps. The efforts intensified when Diamler, Mercedes' parent company, along with BMW and Audi, jointly purchased Nokia's digital mapping company, with the premise of the purchase being that it would help create "highly automated driving."
Even more important, is Google's recent advances in the same field. As Google continues to make strides towards making their own driverless cars a reality, Mercedes has responded with strides and advances of its own.
Uber has a lot to gain by partnering up with Mercedes, which is why the rumored order of 100,000 autonomous cars is so important. Analysts suggest the autonomous car technology market would be worth $25 billion come 2020, though they also believe these cars wouldn't find themselves on the roads until a decade later at most due to government regulatory hurdles.
This is huge for Uber, which, despite operating in more than 50 countries and about 300 cities around the world, isn't making profits.
Mercedes also has much to gain from this deal, as the purchase of 100,000 S-Classes in one go is the rough equivalent of how many S-Classes Mercedes managed to sell in a single year. If we assume that Uber worked out a deal for the bulk order, which reduced the suggested U.S. price of $95,000, and got each car for $80,000, then that works out to an $8 billion price tag, or about eight percent of the earnings that parent company Daimler made off of Mercedes Benz in 2015.
However, even as Uber and Mercedes look forward to the future, rivals are making plans of its own. Mercedes competitor BMW said that it was considering launching its own ride hailing service, which would compete with the likes of Uber.