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Uber Heads Leaderless Into the Driverless Car Race

With Travis Kalanick gone, there is no dude in the car. And for now, someone still has to drive.

(TNS) -- Everyone knows the wheels have come off Uber. Reports abound of a toxic corporate culture, a string of scandals, a mass executive exodus and the messy ousting of CEO Travis Kalanick.

But it’s as big a deal that the company’s push into robot cars seems to be veering off the road. Co-founder Kalanick himself views self-driving technology as life or death for Uber, and investors say it is vital to justify the ride-hailing company’s $69 billion valuation.

Is Uber worth that much? It’s a question of fares — and volume. Meeting its growth projections will require ever-cheaper rides and major market penetration. And the free-speaking Kalanick has a unique way of expressing that.

“The reason Uber could be expensive is because you’re not just paying for the car — you’re paying for the other dude in the car,” Kalanick said in 2014 at a tech industry conference.

At that point, the company had yet to launch its autonomous-vehicle project. Even then, though, the math was clear: As driverless cars drop in cost, it seems inevitable that they’ll offer cheaper rides than human drivers. And at some point, they could get so inexpensive that they supplant personal car ownership. At that point, Uber and its ilk would be ready to grab a huge share of the global transportation market.

To that end, Uber has poured money into its self-driving efforts, spending $680 million for startup Otto (now the focus of a trade-secret lawsuit with Waymo), paying top dollar to raid the robotics department at Carnegie Mellon University, buying and refurbishing a research center in Pittsburgh, and running tests with passengers in Pittsburgh, San Francisco (briefly) and Phoenix.

But now its staffing — both at headquarters and in its Advanced Technology Group — is in disarray. With Kalanick gone, there is no dude in the car. And for now, someone still has to drive.

Waymo’s allegations that Uber used purloined technology loom large. The judge in the Waymo vs. Uber case took the unusual step of referring the matter to federal prosecutors, opening up the possibility of criminal charges. Uber has denied any wrongdoing, and the case is scheduled for an Oct. 10 trial.

“Self-driving is of critical import to Uber,” said venture capitalist Jim Scheinman, founder of Maven Ventures, which invested in self-driving car startup Cruise. “They’ve spent a fortune on it to date, especially acquiring Otto and the Carnegie Mellon team. But it’s a mess over there, between the Waymo-Uber lawsuit and key leaders and engineers from the Uber self-driving teams leaving or being fired.” (Cruise was purchased last year by General Motors, which also has a stake in Uber rival Lyft.)

With Uber poised for major change from the top, what might befall its self-driving research?

“I think this puts the board and the new management in the position of saying, ‘Do we want to keep doing this (working on autonomous cars), or do we want to look at our strategy?’” said Mike Ramsey, research director at Gartner.

The company may decide to double down on robot-car work — or not. “It’s not hard to imagine that Uber might spin it out,” he said. “It may have value, but Uber could determine that it does not have to absolutely own it itself.”

While agreeing with Kalanick that self-driving cars will revolutionize transportation, he and others question why Uber needs its own expensive, home-grown technology when dozens of companies — including all the big carmakers — are hard at work on this.

“I’m not entirely sure what Uber’s competitive advantage is in the supercompetitive market for developing self-driving cars,” said Mike Walsh, founding partner of Structure Capital, who invested in Uber in 2010 when it was valued at $4 million.

“I can totally understand why Uber would want to extensively test self-driving vehicles in its operations,” Ramsey said. “But I have a hard time understanding why Uber needs to create its own self-driving car. The only answer seems to be that it doesn’t want to be beholden to a Google that will eat away at its margins.” (Waymo is the company that grew out of Google’s self-driving car project, now a separate division within parent company Alphabet.)

Lyft, Uber’s main rival, is equally gung-ho about the robot-taxi future, but its strategy is to offer its ride-hailing service as a platform where other companies can provide autonomous vehicles. It has teamed up with big players including General Motors, Waymo and nuTonomy.

Uber does have autonomous-car partnerships, too: a $300 million deal with Volvo to retrofit XC90 sport utility vehicles with Uber’s self-driving technology and an agreement with Mercedes-Benz parent Daimler in which the German company’s self-driving cars will pick up passengers through Uber’s app.

“Auto manufacturers like Daimler are crucial to our strategy because Uber has no experience making cars — and in fact, making cars is really hard,” Kalanick said in a January blog post. “This became very clear to me after I visited an auto manufacturing plant and saw how much effort goes into designing, testing and building cars.”

But a source close to the company said some of its attempts to pursue car partnerships fall flat because it doesn’t have as much leverage as it thinks.

“Uber comes to the table thinking they are way more important to this ecosystem than they really are,” said the source, who asked not to be identified because he wasn’t authorized to speak publicly. “The barriers to connecting riders with cars are very, very low compared to the barriers to manufacturing vehicles.”

In the meantime, what Uber has been manufacturing is drama. The car is still driverless. The destination: unknown.

©2017 the San Francisco Chronicle. Distributed by Tribune Content Agency, LLC.