Uber Technologies (UBER 0.46%) is going all-in on autonomous vehicles. The company just committed to a massive multiyear partnership with electric vehicle (EV) maker Lucid (LCID -2.17%) and self-driving start-up Nuro in a move that could reshape its future.
As part of this new alliance, Uber will make a $300 million investment in Lucid and a separate, "multi-hundred-million-dollar" investment in Nuro. It will then look to deploy at least 20,000 robotaxis built by Lucid and equipped with Nuro's Level 4 autonomous driving tech over the next six years.
This isn't Uber's first foray into robotaxis, but it is its biggest direct bet on owning an autonomous fleet. The company already had partnerships with Alphabet's (GOOGL 0.54%) (GOOG 0.45%) Waymo and May Mobility in the U.S., WeRide in Europe and elsewhere, and Pony.ai in the Middle East.
Unlike prior partnerships where Uber mostly provided the user-facing platform, this time it -- and in some cases third-party fleet partners -- will own and operate the vehicles. It's a major shift in strategy and signals that Uber wants more control as the ride-hailing market starts to shift to robotaxis.
Image source: Getty Images.
For its robotaxi fleet, Uber will use Lucid's Gravity SUV, which will then be equipped with Nuro's autonomous vehicle system. The Gravity's long 450-mile range and hardware redundancies make it a great option to use as a robotaxi. Lucid and Nuro have already begun testing prototypes in Las Vegas.
Uber makes a big bet in a competitive market
This is an important move for Uber. Robotaxis aren't some futuristic vision anymore, they are already on the streets and being used. Waymo is delivering paid autonomous rides in several U.S. cities, while Tesla (TSLA 3.49%) just launched a robotaxi pilot in Austin, Texas.
The risk for a company like Uber, as the world begins to shift toward robotaxis, is that it could get left out of the picture. If Alphabet and Tesla decide they just want to offer driverless rides directly through their own apps, Uber risks being left out of the equation in the future.
As such, Uber's partnership with Nuro and Lucid is a way for it to get more control over its future. The company isn't just licensing Nuro's technology and buying vehicles from Lucid; it's directly investing in both. This is both a defensive and an offensive move, but it was smart to make.
However, this bet does not come without risks. Nuro, for its part, has had to reinvent itself. The company was originally focused on using its technology with delivery robots, but after burning through a boatload of cash, it shifted its strategy to licensing its technology to automakers and other companies. This is its first big licensing deal, so we'll have to see how it plays out.
Uber's platform advantage
At the end of the day, Uber likely isn't going to beat out Tesla or Alphabet on the technology front; however, the company does have some nice advantages. The company has built a strong brand and is a popular app on hundreds of millions of people's phones around the globe. It also has decades of routing and pricing data, as well as expertise in how to manage vehicle supply in a dynamic demand environment. So while a company like Waymo can develop a top-notch autonomous vehicle system, Uber has strong distribution already in place and knows how to operate a fleet.
That's why Waymo has teamed up with Uber in cities like Austin and Atlanta. Waymo handles the vehicles and technology, while Uber runs the customer experience. Thus far, the partnership appears to be going well. For example, Uber has said that the average Waymo vehicle in Austin is busier than 99% of its human drivers.
With this new Lucid-Nuro partnership, Uber will take this concept to the next level by having more control over vehicle ownership. It's a smart move, but we'll also see how it impacts its other partnerships, including with Waymo.
A strong core business gives Uber time
Outside of its robotaxi partnerships, Uber's core business is currently running on all cylinders. The company is profitable and generating strong free cash flow. Meanwhile, both its ride-hailing and delivery segments are growing nicely. This will give it time to get its robotaxi fleet off the ground and running.
In the first quarter of 2025, its total trips rose 18%, and revenue climbed 14% to $11.5 billion. Mobility revenue increased 15% to $6.5 billion, while delivery grew 18% to $3.8 billion. Profitability metrics are growing even faster. In mobility, EBITDA grew 19% to $1.8 billion, while its delivery EBITDA soared 45% to $763 million. Importantly, the company generated $2.3 billion in free cash flow in the quarter, up 66% from a year ago.
The road ahead
That said, the future is clearly all about robotaxis.
Building out a robotaxi fleet -- even with partners -- costs a lot of money and requires strong execution. Lucid won't begin producing the vehicles until late 2026, and it will take time for production to ramp up. Meanwhile, competition is likely only going to heat up in the interim.
That said, Uber isn't sitting still, and it's making multiple bets in the space to make sure it does not get left standing on the side of the road as the market shifts.
While not without its risks, this is an important deal for Uber. If the company can become a leader in the robotaxi market, the payoff could be enormous. Investors should be watching closely.
