Uber at Fault for Self-Driving Car Crash, Other Problems?


Nov. 20 2019, Published 3:10 p.m. ET

Yesterday, the National Transportation Safety Board (or NTSB) said Uber (UBER) was at fault for an accident involving a self-driving car in March 2018. This accident led to the first-ever death involving an autonomous vehicle. Reuters reported that NTSB also said that state and federal regulators need to do more to safeguard the driver.

The Uber crash caused an uproar in the self-driving car market, relating to the safety and monitoring of such vehicles. This accident also made companies involved in self-driving cars realize that the journey to putting their vehicles on the road, with or without a backup driver, will be a long one.

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NTSB finds fault with company and backup driver in Uber crash

The accident in March 2018 happened in Tempe, Arizona, when 49-year-old Elaine Herzberg was walking her bicycle across the street. NTSB also said that the probable cause was the back-up safety driver, who was “visually distracted throughout the trip by her personal cell phone.” The board also mentioned that the victim was crossing the street outside a crosswalk. Another factor the NTSB cited was Arizona’s insufficient policies to oversee autonomous vehicle testing.

Board member Jennifer Homendy said the National Highway Traffic Safety Administration (or NHTSA) isn’t able to properly regulate self-driving vehicles. She added, “In my opinion, they’ve put technology advancement here before saving lives.”

Uber’s autonomous vehicle ambitions

After the Uber crash, the company had stopped testing self-driving vehicles. But testing later resumed in December 2018. Uber had revised its software and made significant safeguards for revised testing. Reuters also quoted Nat Beuse, safety head of Uber’s autonomous vehicle efforts, saying that Uber remains “committed to improving the safety of our self-driving program.”

Despite the NTSB citing a lapse in Uber’s safeguards, the company is expected to avoid any serious repercussions. The local prosecutor on the case has declined to press charges.

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Uber and Lyft safety concerns

In addition to this crash, ride-hailing companies Uber and Lyft (LYFT) have been involved in various regulatory and safety issues. In October, both companies decided to skip the congressional hearing meant to examine companies’ safety and labor practices. They’ve also come under increased scrutiny after incidents with passenger safety and driver treatment.

Profitability concerns for Uber and Lyft

Apart from safety concerns, both Uber and Lyft stocks have struggled with profitability concerns. Uber stock has fallen about 38% while Lyft stock has plunged nearly 39% since their respective IPOs. Uber and Lyft’s third-quarter earnings were better than expected. Analysts and investors, however, are still wary of the long path to profitability. Both companies are expecting to turn EBITDA-positive by 2021.

Analysts are still positive on Uber and Lyft

Despite most of the above concerns, the majority of Wall Street analysts are positive on these stocks. 63% have a “buy” rating on Lyft stock while 65% recommend a “buy” for Uber.

Recently, Argus Research upgraded Uber stock from “hold” to “buy.” The analyst believes the competitive environment for the company’s core ride and Uber Eats businesses are improving. As CNBC reported, Barclays thinks Uber could be just “one major announcement away” from a positive narrative. Barclays’ analysts feel that, if Uber could combine its US restaurant delivery business with another company and scale back its India operations, it could change its profitability outlook significantly.

Analysts have started focusing on these companies’ changed narrative to profitability from growth at all costs. Most believe this changed focus will drive profitability.


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