Artificial intelligence (AI) is undoubtedly one of the biggest trends of our generation, and it will disrupt almost everything that we know.
One industry that will likely see the transformative impact as a result of AI is the transport industry, thanks to the rise of autonomous vehicles, autonomous public transportation, etc. There are two companies well-positioned to ride the growth of the autonomous ride-hailing industry: Uber Technologies (UBER +1.91%) and Baidu (BIDU 1.83%).
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The opportunity in autonomous ride-hailing industry
When discussing autonomous driving, most investors will naturally think about car manufacturers that are well-positioned to make autonomous cars, such as Tesla. While car manufacturers are important players in this revolution, ride-hailing is another major industry that's set to undergo massive growth.
According to a white paper published by Ark Invest, the autonomous ride-hailing market could reach $11 trillion to $12 trillion globally . Technological advancements in AI and batteries would reduce the cost per mile of autonomous driving over time, reaching as low as $0.25 per mile at scale. To put it into perspective, Ark estimated the price per mile for Uber to be $2.00 and for the commuter bus to be $0.22.
In other words, the low cost per mile of autonomous vehicles will create massive new demand for travelling, benefiting companies that have positioned themselves to ride this wave.
Uber
One industry that will have to adapt to autonomous ride-hailing growth is existing mobility platforms like Uber, as autonomous vehicles will likely replace the majority of, if not all, human-driven vehicles over time.
Fortunately, the ride-hailing company has positioned itself to win in this race by partnering with major autonomous-driving software companies like Waymo. The idea is that Uber will be a marketplace for human-driven and self-driving cars (and potentially trucks), allowing the company to benefit from the growth of this industry. In this case, it will gain even though it may not have its own self-driving software -- in fact, Uber sold its self-driving unit to Aurora in 2020 to focus on its current strategy.
While there are disadvantages to not owning its self-driving technology stack, Uber can leverage its huge customer base and business know-how in these partnerships to create value. For instance, Uber will bring Waymo's autonomous ride-hailing services to Austin and Atlanta in 2025, available only on the Uber app. In this partnership, Uber will provide fleet management services, while Waymo will be responsible for testing and operation of its autonomous driving software, Waymo Driver.
NYSE: UBER
Key Data Points
By being neutral, Uber can partner with anyone (even Tesla in the future) to offer its services to its users. While this approach may lead to a lower share of the commission, Uber can offset that with a larger addressable market. Besides, Uber can apply the same strategy globally via its platform or its affiliates like Didi and Grab.
Similarly, Uber can apply the same partnership strategy to its other businesses, such as Uber Eats and its logistics business, which will further help it strengthen its business position even as the world moves toward autonomous mobility.
Baidu
Like Uber, Baidu has positioned itself in the autonomous ride-hailing industry. However, it's doing it differently by focusing on developing its autonomous driving platform (Apollo) and offering ride-hailing services under its brand, Apollo Go.
The Apollo platform, launched in 2017, is a front-runner in autonomous driving software in China. Its ride-hailing service, Apollo Go, provided over 1.1 million rides in the fourth quarter of 2024, bringing its cumulative number of rides to 9 million. It has also commenced 100% fully driverless operations across China since February 2025. So, unlike Uber, which has chosen to partner with Waymo, Baidu operates its own software platform and ride-hailing service, competing against incumbents like Didi.
NASDAQ: BIDU
Key Data Points
So far, Apollo Go has been operating in 12 cities in China, with a target of reaching 65 cities in 2025 and more than 100 cities by 2030. Moreover, the tech company aims to expand its ride-hailing business beyond China into other countries. To this end, the company's recent expansion into Hong Kong will help it develop its software in a right-hand-drive market, setting the foundation for future expansion into markets like Southeast Asia.
While Baidu has been an early mover in this industry, it will face enormous challenges in building a sizable ride-hailing business. Regulatory challenges, financial constraints, and ongoing technology changes are some of the challenges the company must face. The silver lining is that Baidu has had reasonably good relationships with Chinese regulators and has a solid balance sheet (and a profitable advertising business) to finance its ambitions -- it could also raise capital if necessary.
Investors looking to ride the autonomous driving trend should keep an eye on this Chinese tech conglomerate.
