Is a driverless future good news for Uber investors?

As with any investment, capital is at risk.

Early in 2024, Tesla founder Elon Musk outlined his vision of a fully autonomous ‘robo-taxi’ service. One day, he hinted, his company would surpass Uber’s achievements in revolutionising personal transport.

Human drivers, he said, will become as rare as human lift-operators: “You [will] just summon a car using your phone. You get in, it takes you to a destination, you get out.”

The prospect of going up against the might of Tesla in a technology that could slash the cost of ride-hailing weighed for a spell on Uber’s share price.

But Monks saw a glaring omission in the market’s thinking: Uber already offered Musk’s frictionless future by combining robo-taxis with human drivers.

Why Monks bought when others sold

Uber matches passengers with Alphabet’s Waymo autonomous vehicles (AVs) via its app in Phoenix, Austin and Atlanta. People simply get into these robo-taxis, travel and get out. What’s more, Uber’s partnerships with AV and AI technology leaders put it in a good position to aggregate future global demand for robo-rides.

When the market declares a company a loser, Monks’ managers try to remain flexible and consider the situation from a different angle. Often, the market is spot on. Revolutionary technologies do shift the ground beneath incumbents, even young ones like Uber. We’re not contrarian for the sake of it.

In Uber’s case, however, we came to a different view. Early in 2025, we pounced, taking advantage of the market’s jitters to buy a stake in Uber for our shareholders. We believed the stock was significantly undervalued.

Growing current markets

Uber has become so ubiquitous that it’s easy to forget it’s a transformative technology. Over 180 million customers now use the app to take over a billion trips each month.

But we see Uber’s core product as only halfway there: it can expand into new countries, reach more people within existing markets and increase their use of the app.

Uber recently said that in India and Spain, only about 0.5 percent of adults use Uber each week. In Australia, the number is 6.5 percent.

Because Uber offers both ride-hailing and food delivery through Uber Eats, it can keep drivers busier – and earning more – by finding them work ferrying passengers and delivering food.

To Monks, those factors add up to a powerful engine with a long way to run. The more people hail Ubers, the busier its drivers are, the cheaper its rides are, and the more people hail Ubers. And so on.

Top of the robo-taxi rank

Anyone considering buying an AV to earn income by listing it on a ride-hailing network will have to calculate the return on investment.

The most important variables are the vehicle’s cost and the time it spends earning money – its utilisation rate. That, in turn, depends on how many customers the vehicle can reach.

As the world's largest ride-hailing network, Uber offers a structural advantage. Anyone who puts their vehicle on its network has instant access to all its customers, driving up utilisation.

Uber’s experience with Waymo supports this. Waymo AVs on Uber in Phoenix were busier than 99 percent of human equivalents. Uber can also manage the ‘ground ops’ of an autonomous fleet – charging, cleaning and servicing.

Uber can blend human and autonomous drivers into a single network, expanding and contracting supply to meet demand. Over time, customers will stick to the network that reliably gets them, or their food, to where they need to be quickest and at the lowest cost.

But we don’t think autonomous ride-hailing is a winner-takes-all market. Decreasing costs and increasing ride quality should expand the total market, creating more opportunities for everyone.

Transformative new technologies are rarely zero-sum. But it’s when most investors think they are that the more flexibly minded can seize opportunities.

A ‘super-app’ and more

Uber One has more than 36 million members through its subscription programme. Others will have booked a flight or train journey through Uber’s travel-booking service, or noticed adverts in the app, another growing profit stream.

These add-ons show Uber expanding its offering and making its app more useful. If successful, Uber could become an Asian-style ‘super app’, helping consumers run their daily lives.

The company has also announced a partnership with NVIDIA that will enable ‘level-4’ fully autonomous vehicles to run on Uber’s network, meaning they can handle all driving tasks within a pre-defined zone. That would let owners earn money while they work or sleep, echoing Musk’s vision for Tesla.

To Monks, these are all signs of a company firing on all cylinders. We’re excited to watch Uber help lead the global transition to autonomous transport.

Important information

This article does not constitute, and is not subject to the protections afforded to, independent research. Baillie Gifford and its staff may have dealt in the investments concerned. The views expressed are not statements of fact and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. Baillie Gifford & Co and Baillie Gifford & Co Limited are authorised and regulated by the Financial Conduct Authority (FCA). The investment trusts managed by Baillie Gifford & Co Limited are listed on the London Stock Exchange and are not authorised or regulated by the FCA. A Key Information Document is available at bailliegifford.com.