Amnon Shashua isn't a household name in most circles. But he's the co-founder, chairman, and chief technology officer of Mobileye (NYSE:MBLY), a company that provides the processors and software that power most automakers' driver-assist technologies.
Mobileye specializes in turning images from digital cameras into information that a car's processor can understand -- expertise that is becoming increasingly valuable as more and more automakers commit serious resources to developing self-driving cars.
Mobileye is positioning itself to be a key supplier of critical parts of those self-driving systems -- and a partner to many of the automakers' development teams. Its clients include nearly every automaker you've ever heard of, from General Motors (NYSE:GM) to Volkswagen to Tesla Motors (NASDAQ:TSLA).
As the chief architect of Mobileye's technology, Shashua has a great vantage point from which to see the emerging future of the auto business. And while he acknowledges that radical changes are coming to the business, he doesn't think that companies like Uber Technologies will have a major presence in that future.
Why Mobileye's CTO thinks Uber won't be dominant
During Mobileye's second-quarter earnings conference call, Shashua was asked whether the company is seeking business from ride-hailing firms like Lyft, Gett, and Uber.
Uber in particular is known to be funding its own research program into self-driving technologies, perhaps with the aim of building systems that can be retrofitted to regular cars. The privately held Silicon Valley company already has at least one self-driving prototype car testing on public streets in Pittsburgh, where its research center is located.
The question made a lot of sense: Mobileye is seeking deeper partnerships with many of the automakers that are most aggressively pursuing self-driving technology. Why wouldn't it want to partner with a company like Uber as well?
But here's what Shashua said when asked if Mobileye was seeking partnerships with ride-hailing (or "shared mobility") companies around self-driving research efforts:
No, we are not involved in discussions with shared mobility companies, because we believe that asymptotically most of the car manufacturers would become mobility companies. So there will be nothing special about Lyft and Uber and Gett in the longer term. Our focus is in the car industry.
That was blunt. Is he right?
Why potential Uber investors need to think this through
He might be, and if you're an investor who has been hoping for an Uber IPO, it's worth taking some time to think this through.
While Uber has a huge valuation, ride-hailing is still very much in its infancy. As an industry, it's expected to grow significantly, particularly as advances in self-driving technology allow for greater automation.
But it's also becoming clear that -- as Shashua said -- the established automakers will be players in the ride-hailing industry. GM has already started its own car-sharing company, Maven -- and it has a major equity stake in Lyft. Earlier this year, Ford (NYSE:F) announced an initiative called FordPass, which might be about building out the infrastructure needed to support a ride-hailing service in the not-too-distant future.
And Tesla's latest "master plan" said that eventually, owners of Teslas with self-driving capability will be able to let their cars go give rides (via a Tesla ride-hailing app and infrastructure) when the cars aren't otherwise in use.
It's a safe bet that a lot of other automakers are laying the groundwork for similar services -- and it's a safe bet that while those efforts might not yet be public, Shashua has heard about them in discussions with Mobileye's clients.
But will the automakers be able to compete with Uber?
I don't see why not -- assuming that they make a serious effort to do so.
Uber has a big valuation and a wide network, but it also has big challenges. Right now, the hard part of Uber's business right now is recruiting, retaining, and paying its drivers. The challenges of dealing with drivers will go away once self-driving technology is widespread, but they'll be replaced by (presumably) the challenges related to buying and maintaining a vast fleet of self-driving cars.
That might be why Uber recently made a partnership deal with Toyota (NYSE:TM). But the deal is very limited, and it doesn't look (right now, at least) like Toyota is very interested in being an involved, major partner with Uber.
That's where automakers seem likely to have natural advantages. Looked at through that lens, it does seem very possible that Shashua is right, and that ride-hailing companies like Uber that don't have significant partnerships with automakers will get pushed aside, as the companies that make the cars step in to operate the fleets.