Investing in Autonomous Vehicles

According to Bernstein, a pressing question in the evolving autonomous vehicle (AV) space is: Do Waymo or Tesla (NASDAQ:TSLA) need Uber (NYSE:UBER) and Lyft?

As robotaxis transition to the mainstream, the potential for partnerships between AV companies and rideshare platforms like Uber and Lyft (NASDAQ:LYFT) is becoming increasingly relevant.

Bernstein believes that collaborations make sense for both sides. Autonomous fleets promise safer and cheaper rideshare services by eliminating labor and insurance costs, but challenges remain.

> "AV fleets are expensive to build and scale," said Bernstein, emphasizing the appeal of partnerships.

To grow quickly without heavy capital investments in fleet management and operations, "it should be cheaper to pay to 'plug in' to an existing rideshare network."

Bernstein stressed that rideshare platforms offer critical value by driving better utilization rates. Rideshare platforms can generate incremental demand by cross-selling AVs to a larger audience—leading to better utilization rates and fewer deadhead miles.

This is key because even though AVs are competitive on a per-mile cost basis, under-utilization still limits profitability.

Another factor favoring partnerships is speed to market. Bernstein noted that Uber has already partnered with several AV companies, including Waymo, Cruise, and WeRide, calling it the most FCF friendly way to deploy AVs.

For AV providers, collaborating with rideshare platforms allows them to reduce customer acquisition costs (CAC) and leverage existing payment processing systems and fleet management capabilities.

However, Bernstein warned that fragmentation in the AV market makes scaling quickly essential. A more fragmented AV market gives rideshare platforms more bargaining power, increasing the need for partnerships.

Whether AV players choose to expand existing agreements or compete directly will depend on network economics, competition, and how much of the revenue and customer relationships they are willing to share.

Ultimately, partnerships offer both sides a path to grow efficiently, said Bernstein, but much still has to fall into place before these partnerships fully mature.