Uber Wins Analyst Praise For Robotaxi Boom, Lyft Faces Tougher Road Ahead

Bank of America Securities analyst Michael McGovern maintained a Buy on Uber Technologies UBER on Tuesday. However, with Waymo’s rapid growth in San Francisco and other US cities, the analyst remained more cautious about Lyft, Inc LYFT and maintained an Underperform.

McGovern hosted multiple experts on autonomous vehicles (AV), including Edwin Olsen, the CEO of May Mobility and a former manager at Waymo.

May Mobility highlighted how May is one of only two companies currently providing rides without safety drivers in the US (the other being Waymo), the analyst said.

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McGovern noted that May is currently operating driver-out L4 rides in Peachtree, Georgia, its third market since inception.

The analyst said that in the long term, McGovern expects the AV ecosystem to consist of demand aggregators (Uber, Lyft), vehicle manufacturers like Toyota Motor TM, fleet operators like Marubeni, and autonomy providers such as May, Waymo and Tesla Inc TSLA.

In May’s partnerships with Uber or Lyft, McGovern noted that networks will provide May with thousands of trip requests every hour, allowing them to be “picky” about routes and enabling May Mobility to “drive our asset utilization incredibly high.”

May is partnering with both Uber and Lyft, as network operators provide a “firehose” of demand. As the analyst noted, “all of the barriers of us scaling to thousands of vehicles are addressed.”

May is still on track to launch on Lyft “in the middle of this year” in Atlanta, whereby riders will request a Lyft and will be assigned a May vehicle “if we pluck your trip out,” McGovern said.

Although McGovern expects a rapid ramp-up, the rides will initially start with a safety driver (driver-in) before expanding to driver-out following the test period. The analyst also noted Uber’s launch will come “at the end of this year” in Arlington, Texas, with driver-in testing to start before the broader rollout and driver-out launch.

May Mobility uses a combination of camera, LiDar, and radar, which CEO Olsen views as the “best way” to reach L4, McGovern noted. However, he remains “very bullish” on camera technology, which is “advancing fast,” the analyst noted.

Olsen spoke to the original use case of LiDar sensors in geological surveys, which underscores how a lack of a scalable commercial use case rather than technological complexity triggered the historically high cost per LiDar sensor, McGovern noted.

As a result, Olsen expects the cost of LiDar or radar to continue to drop as AV tech scales, the analyst said. He noted that although it’s “possible” that by 2030, camera-only systems can provide scaled L4 rides, he believes it is “not a given” that camera-only is the best system for L4 long term, McGovern said.

The analyst also hosted a former manager at Waymo. Key takeaways included still bullish on sensor tech & mapping ability to scale, with sensor cost dropping quickly, sensor cost minimal when amortized over thousands of rides, but provides “superhuman” depth perception, Waymo likely interested in pursuing multiple commercialization opportunities, including network partners (Uber) and OEM partners (Toyota), 4) Zoox likely slower to scale given preference for customized vehicle.

Overall, McGovern noted the proliferation of multiple L4 AV providers, which benefit Uber via its nearly 20 AV partnerships and global scale.

Price Action: UBER stock is up 1.85% at $87.20 at last check Monday.

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