What Uber’s Lucid Partnership Means for Self-Driving

Uber (UBER) announced a partnership this week with Lucid (LCID), an electric car company, and Nuro, a young AI company working on self-driving. 

Uber has worked on self-driving for years, previously partnering with Waymo with limited deployments. It also plans to debut a self-driving partnership with Volkswagen microvans next year. If that’s not enough, it’s also working with Baidu (BIDU) to launch robotaxis in China and internationally. “The future of transportation is electric, shared, and autonomous,” Uber said.

Nuro says its AI self-driving system builds on multiple levels, combining “real-time perception data” with “low-cost map priors.” For perception, it uses LiDAR, radar, and cameras, giving it a complex 3D understanding of its environment. I wrote about LiDAR in last Sunday’s column, and why it’s critical for safe self-driving technology. 

Nuro then uses Nvidia (NVDA) chips to let the AI process the data and respond in real time. On its site, it claims 1.4 million autonomous miles driven with “zero at-fault incidents,” and says it is the first autonomous vehicle (AV) system to receive an NHTSA-approved exemption. Its system also allows for a human to manually take over if necessary.

Uber’s valuation promise has long hinged on self-driving. Without self-driving there is already plenty of competition in the ride hailing and food delivery business now, and the company has struggled with profitability per ride. With this new partnership, it aims to deploy 20K or more Lucid vehicles with Nuro’s system installed globally over the next 6 years. It plans to launch next year in a “major U.S. city.” As part of the partnership, Uber will also invest multi-hundred-millions in both companies. 

Specifically, Uber will be using Lucid Gravity models, luxury 7-seat SUVs with a price tag starting at $94,900. For now, this makes autonomous rides a premium service. Its range is 450 miles, towards the upper end of EVs.

For some reason, Uber isn’t working with Tesla (TSLA), an electric vehicle company touting its own proprietary self-driving. Uber seems to be hedging its bets across the industry, partnering with other EV-makers and self-driving systems, but not with Tesla. To be fair, Tesla’s vision for self-driving is a little different, with CEO Elon Musk keen to remove the steering wheel altogether, and its AI system relying on cameras rather than multiple perception types.

Nuro’s CEO said in the announcement that they have been working on this “AI-first autonomy system” for nearly a decade. Lucid’s CEO said the investment validates its “fully redundant zonal architecture.” Redundancies are key for robotic technologies, especially AI: better to have multiple failsafes than rely on one system, just like the way human senses work.

Nuro’s self-driving system is supposed to be “level 4”: the technology is capable of driving itself, without human supervision, in normal conditions. 20K cars deployed is nothing to sneeze at, but it’s still a small fraction of Uber’s overall service (it averages 34 million trips a day).

As far as stock movements, LCID jumped on the news but is still in the red for the year. It’s down only around 2% year-to-date, but has lost over 20% of its value since last year. Uber is coming off a recent spike but is up 50% year-to-date and over 30% since last year.

The autonomous driving race is global, and growing as companies hone their technologies, gather data, and rack up miles. More and more participants are getting test vehicles on roads. Uber advancing deployment allows more consumers to try out what driverless technology feels like without committing to a larger purchase. 

Still, keep in mind that the advanced “level 4” AI is only ready to handle “normal conditions” – good weather, and good sense from the other drivers around it. That’s why, so far, Uber’s self-driving partnerships have launched in cities with warm weather. As a Minnesotan, I’m waiting for self-driving to confidently handle black ice.

Tune into the Schwab Network for the latest on the self-driving race and more!