Uber's robotaxi edge: human drivers

Uber is betting billions on a driverless future, but the secret to making the economics work could be — surprise! — its vast army of human drivers.

Why it matters: Uber believes a hybrid network of robots and people can keep its expensive autonomous vehicles busier, and therefore more profitable, than fleets made up entirely of robotaxis.

The big picture: Think of a high-tech robotaxi like an airplane: It costs money whether it's carrying passengers or sitting on the ground.

The more trips each vehicle makes, the more revenue Uber and its robotaxi partners can squeeze from that expensive asset, offsetting the fixed costs of the technology, vehicle financing, insurance, depot space and other infrastructure.

Between the lines: Ride-hailing is a supply-driven business, and robotaxis aren't a substitute for drivers, Uber says — they're an additional form of supply.

With greater supply comes lower prices and shorter wait times, which means increased reliability.

That stimulates more demand, and ultimately makes the ride-hailing pie bigger.

That's Uber's theory.

Robotaxi economics remain unproven , Uber's own president of autonomous mobility and delivery, Sarfraz Maredia, tells Axios.

It's still early, and no company is making money yet operating them, nor is anyone yet operating them at massive scale.

Whether AVs and all that's needed to support a fleet — including charging infrastructure and maintenance — will ultimately be cheaper than today's ride-hailing model "very much has yet to be proven," Maredia says.

"The unit economics today have a long way to go." Uber's bet is that its mix of human drivers and AVs will produce better returns.

How it works: In a hybrid network — and Lyft has a similar philosophy —AVs would handle the steady "base load" of everyday demand.

Human drivers, meanwhile, would provide extra capacity during rush hour, bad weather, concerts and other demand spikes.