By on March 21, 2016

2014 Mercedes-Benz S-Class

Uber wants to eliminate drivers from its operation, but the ride-hailing service reportedly just purchased an armada’s worth of Mercedes-Benz S-Class sedans that don’t yet have fully autonomous capability.

On Friday, Reuters reported that sources at both companies told the German publication Manager Magazin that an order had been made by Uber for “at least” 100,000 S-Class vehicles.

The shelf price for that volume of Benz’s would be in the neighbourhood of $10 billion.

Another source emerged from the automotive industry to explain that Uber had been “shopping around” for a large number of autonomous cars.

Speaking last September, Uber founder Travis Kalanick touted autonomous driving technology and pledged that his company would use it to expand their business. Before news came of a possible bulk Benz purchase, Uber was reportedly spending billions of privately-raised dollars on the development of its self-driving plans.

Google, which is aggressively pursuing autonomous technology, owns a sub-seven percent stake in Uber.

If the reports of the Mercedes-Benz purchase are true, the sheer volume of vehicles means they won’t arrive at Uber’s doorstep all at once. But where will the self-driving technology come from? Mercedes-Benz already employs autonomous technology in its Intelligent Drive system to keep the vehicle in its own lane, avoid coming into contact with other vehicles, and apply emergency braking, but it doesn’t allow fully autonomous operation.

In 2013 the automaker staged a successful autonomous 103-kilometer road trip in Germany using an S500 research vehicle outfitted with existing hardware, albeit with much more of it.

If Uber has insider information about looming advances in autonomous technology from Mercedes-Benz, it isn’t saying. Hell, it’s not even confirming the purchase of the sedans. And even if the company was about to get its hands on a truly autonomous fleet, it would be up to U.S. regulators to give the go-ahead to operate them.

The National Highway Transportation Safety Advisory recently admitted that the computer controlling an autonomous vehicle could be legally considered its driver, but only if there was no way for an occupant to manipulate the vehicle’s controls. The NHTSA is also seeking to have federal rules regarding autonomous vehicles in place within six months, but that doesn’t mean a green light for road use.

[Image: Mercedes-Benz USA] [Sources: The GuardianBloomberg]

Get the latest TTAC e-Newsletter!

46 Comments on “Uber Allegedly Buys 100,000 S-Class Cars, Confusing Everyone...”


  • avatar
    APaGttH

    1-2-3 I call shenanigans.

    • 0 avatar
      SCE to AUX

      Agreed. S-Class sales in the US are around 20k for a whole year.

    • 0 avatar
      Ltd1983

      Right? Every car site is “reporting” this like this too.

      “Here’s a blog entry, based on a Reuters article, based on German magazine.”

      We didn’t learn the game “Telephone” as kids because it’s a reliable way of distributing information…

      How about someone, I dunno, ask Uber about this?

      When the numbers are obviously BS: $10B and 100,000 S-Classes, and TTAC is just reprinting them, I’m wondering now how much plausible BS they sneak by us…

    • 0 avatar
      DeadWeight

      Horsesh!t story, with TTAC clickbaiting via copy & paste.

      There’s not a snowball’s chance in he!! That Uber is buying 100,000 $95,000 S-Class MBs, let alone 100,000 “autonomous driving” ones…

      Neither Uber’s business model nor capital model would even allow for such a thing even if it intended to make such a large-scale purchase (Uber would literally have to issue 10 billion USD worth of stock or float a 10 billion USD junk bond just to raise the INITIAL capital to acquire 100,000 such vehicles).

      • 0 avatar
        FreedMike

        That’s why they cleverly included the word “allegedly” in the headline.

        • 0 avatar
          CarnotCycle

          Benz PR must love S-bomber getting all this fleet-sales pressl. If such a thing were true, one would be able to pick up a top line Benz pretty cheap in a couple years. Too cheap for MB’s tastes I’m sure.

      • 0 avatar
        Xeranar

        Back in December Uber was suggesting they were worth 62.5B in market capitalization. They could easily get half of that round of investment buy 100K in S500s, lease them in major cities (LA, NY, Chicago) for a substantial amount (1-2K/month) while essentially establishing them as a more traditional black car service and even if they take a hit these kinds of companies are built sadly on just getting more and more stock out there and hoping they find a better revenue stream.

        At this point though, if you have ANY brain at all, Uber is a BAD investment even when autonomous cars come around. Uber has a few bad things hanging over their head: The rulings on independent contractors could ruin their business model and a whole cottage industry of loophole abusers. The ability to keep expanding is limited as taxis and other black car services will enter the market using more tech-accessible methods. Finally, their revenue is a measly 2 billion which is piddlings in the RoI compared to others which is the achilles heel of most tech stocks, they’re built on clay of feet and hopefully get bought by a bigger player before their own weight brings them down.

      • 0 avatar
        stuki

        They probably borrowed the money in Europe, at -0.5%. Getting paid $50mill/year to drive those darned Benzes……

        More realistically, if there is anything to this at all, it is some sort of deal involving leasing the cars on to drivers of an “Uber Benz” service. Likely one where each driver will be guaranteed his “area” will only be served by a limited number of other Benzes. Kind of like backing into the taxi medallion racket, just with Uber controlling the medallions. Nowadays, if you’re Uber, or Uber is your cosigner, money is free. But most Uber driver intenders aren’t credit worthy enough to swing an S-Class.

        But then again, even more realistically, the whole story is just sensationalist spin.

      • 0 avatar

        To add to DeadWeight’s analysis…

        The total number of w222’s built in 2014 (the last year reported) was 103,737. Is Benz going to build a new plant to fill the order?

        I call BS.

    • 0 avatar
      SunnyvaleCA

      These cars will be arriving just in time for April Fools day. I can hardly wait.

  • avatar
    PeriSoft

    I wonder if the sales guy will try to get them for undercoating and fabric protection…

  • avatar
    ajla

    “it would be up to U.S. regulators to give the go-ahead to operate them.”

    They’ll just operate an autonomous fleet anyway. Uber isn’t exactly known for waiting on regulators and lawmakers to give them permission before doing something.

    • 0 avatar
      PeriSoft

      We’re far enough away from full autonomous vehicle operation that these things will all be in the crusher long before you can put a car on the road and tell it to go pick someone up. Not only is the list of intractable unsolved problems long, but the list of intractable problems-which-nobody-is-even-considering-solving-yet is even *longer*. S-Class as a posh limo whose semi-autonomy takes some load off the driver? Sure. S-Class as driverless ferry? Not until my grandkids are in middle school at best. And my daughter can’t even feed herself yet!

      • 0 avatar
        mcs

        @perisoft “We’re far enough away from full autonomous vehicle operation that these things will all be in the crusher long before you can put a car on the road and tell it to go pick someone up.”

        Even Google agrees that it’s going to be a while – possibly 30 years:

        http://thenextweb.com/opinion/2016/03/18/great-techspectations-googles-self-driving-car-30-years-away-really-good-thing/

        https://www.technologyreview.com/s/530276/hidden-obstacles-for-googles-self-driving-cars/

  • avatar
    28-Cars-Later

    100,000 so there will always be 50,000 available when the first 50,000 are in the shop.

  • avatar
    RHD

    I was rooting for Uber as a disruptor and employer of drivers. Crummy, smelly, expensive taxis needed some competition.
    Doing away with humans entirely will make them a company that employs robots and makes profits, while sending ten billion dollars to Germany. It’s a little harder to cheer for that.
    Who is going to wash, fuel and maintain the Mercedes, the dealership?
    There is also the problem of having their expensive, unmanned cars stolen and quickly exported by organized criminals…

    • 0 avatar
      PeriSoft

      “There is also the problem of having their expensive, unmanned cars stolen and quickly exported by organized criminals…”

      Yeah, I can’t imagine how you could get around this. Nobody’s going to set foot in a car that physically prevents them from altering its course or stopping it in an emergency, and nobody’s going to send a $100k lump of metal off to pick up anonymous strangers when those strangers can take over said car at their leisure once inside. It’s difficult to come up with an acceptable way around this.

      • 0 avatar
        FreedMike

        You’re in a Johnnycab!

      • 0 avatar
        Ltd1983

        “Nobody’s going to set foot in a car that physically prevents them from altering its course or stopping it in an emergency”

        That’s a bit of a stretch. People ride in automated trains every day, and as passengers we have no say in what happens to our flights (Germanwings…). People will get used to it.

  • avatar

    You skim Uber drivers so they can barely make a buck, evade the IRS by transferring the money you make to tax havens… then order 10 billion worth of foreign cars. If that’s not gonna upset Donald Trump…

    • 0 avatar
      28-Cars-Later

      The drivers in Vegas told me they get 75%. I’m not saying there are no shenanigans going on but those drives walked away with a decent amount plus tip for no less than 1/2 hour of their time each in my case.

      • 0 avatar
        accord1999

        But drivers have to pay for all expenses related to the car, including all those miles without a passenger. And Uber makes it a point to tell passengers to not to tip.

        And Las Vegas is one of the better off markets, unlike say a Tampa at 65c/mile, or Detroit at 30c/mile before Uber commission.

  • avatar

    I own my own Uber and I have 20 Full-time and 10 part time employees under me.

    Uber can literally PAY FOR NEW CARS if you do it right.

    That’s why I’m cozying up with Hyundai. Their cars last and look great.

  • avatar
    SCE to AUX

    “The National Highway Transportation Safety Advisory recently admitted that the computer controlling an autonomous vehicle could be legally considered its driver, but only if there was no way for an occupant to manipulate the vehicle’s controls.”

    What car buyer wants to sign up to have an embedded robotic co-driver that can’t be sued for its mistakes?

    When the robot makes a mistake, the human will have even less time to react, yet will still be blamed. No, thanks.

  • avatar
    gasser

    April Fool’s Day early??? 100,000 S Class sedans??? Ridiculous. This would hugely increase Uber’s cost basis. They’ve done well having others own the iron, now they want to drastically increase their overhead?? The $1 or so per mile in L.A. won’t even come close to paying for this. What do you think most people would order for a local trip?? Regular Uber for about a buck a mile, or the S Class for about $5 a mile????

  • avatar
    phxmotor

    Key word in all this ..is. Allegedly…
    Who’s born yesterday here guys? Why is this “story” even being run without double and triple confirmation?
    Uber itself lives on such thin ice…a single city code beibg rigorously enfinced can (and eventually will) put it out of business overnight. Any VC foolish enough to think this deviation ftom the basic Uber concept is sound business deserves their fate.
    Is there really an order for 100k upper end vehicles? …yeah right… when pigs fly… and cars drive themselves.
    Even my 11 yr old daughter found it a fairytale. And put her to sleep even before the end of the story.

    • 0 avatar
      VoGo

      It’s possible the contract is over 10 years, which would make the story credible.

      • 0 avatar
        SlowMyke

        Try 20 or 30 years. Even 10,000 S classes is ridiculous. If there is any truth in this story, I’d bet it’s some contact providing the option of ordering up to 100,000 cars over a certain period of time with a much more practical yearly average of maybe a few thousand? No prudent business should be taking a multi billion bet that regulation and tech will jump drastically at the same rate over the next couple years.

        • 0 avatar
          kmoney

          I agree with this. If Uber is so interested in autonomous driving, I would bet that, if anything, they committed to buy a total of 100k units spread over a long term in the future as a way to induce MB to complete its fully-autonomous driving program.

  • avatar
    01 Deville

    Lets assume MB cuts Uber a deal and charges $90k per car with 3 yr maintenance costs included. Lets assume insurance at 3k/yr. That puts fixed costs at about 30k year. Assuming the car drives 500 miles/day (25 miles/hr, 20 hr day-no driver fatigue). At 50% fleet utilization there will be 500×0.5×365=91,250. This puts per mile cost to about 30cents/mile+ gas. At 15 miles to the gallon and $3 per gallon, it would be 0.2/mile. This is about 0.5cents/mile. With 20% overhead (purchasing, software etc) make it 0.6cents/mile. Add another 20% for costs that I might have missed and bring the cost to 0.72/mile. Which means that at $1/mile Uber will be making more than 50% pre tax profit not including depreciation of the car.

    What makes this work is that there are no costs for driver and no driver fatigue. Autonomous cars if rather when technically feasible make perfect economic sense

    • 0 avatar
      28-Cars-Later

      I imagine Mercedes factory margin is more than 10% and Uber was able to get a better deal than simply 10% off of thereabouts.

      • 0 avatar
        Lack Thereof

        Also safe to assume that they will be fleet-order with all the custom option deletes you can imagine. Bare unadorned MB-Tex interior, maybe a smaller engine than is usually available, a cheap wheel & tire combination, etc.

        • 0 avatar
          TonyJZX

          Well then the real question is… “why do this with an S-class”.

          If you want an 4 door saloon/sedan/service car for the avg. Uber patron then why not start with a Prius V or something in the $30,000 range?

          Why would it matter if its a Prius or an S-class?

          • 0 avatar
            Lack Thereof

            Probably because all the fancy-pants self-driving related sensors and gizmos are already in production S-classes. All it needs is to be Uber-ready is software that doesn’t require driver intervention every 1/2 mile. And the blessing of a government somewhere.

    • 0 avatar
      accord1999

      The vehicle isn’t going to have a passenger every mile it travels; based on Uber driver experiences (who can cherry pick time, location and ignore fares that are far away or have little chance of getting another fare at their destination), half of every mile traveled will be empty and make no money at all.

  • avatar
    Chocolatedeath

    ONce again I will say people just catch a bus or train.

  • avatar
    Ltd1983

    If we read the actual Reuter’s story:

    “Earlier on Friday, Germany’s Manager Magazin reported that Uber had placed an order for at least 100,000 Mercedes S-Class cars, citing sources at both companies.

    Another source familiar with the matter said no order had been placed with Mercedes-Benz. Daimler and Uber declined to comment.”

    So the Reuter’s story is basically saying the Manager Magazin article is probably incorrect, and yet all that TTAC or anyone else is reporting is the number from the article.

    Shameful clickbait “journalism”.

  • avatar
    honda_lawn_art

    Wow that’s exciting. On a separate note, does anyone no of some property in Arizona I can buy?


Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Contributing Writers

  • Bark M., United States
  • Chris Tonn, United States
  • Bozi Tatarevic, United States
  • Vojta Dobes, Czech Republic

Get No-holds-barred, take-no-prisoners Automotive News in your Facebook Feed!

Already Liked