Uber Technologies Inc (NYSE:UBER, ETR:UT8)'s new partnership with Cruise to bring its autonomous vehicles to the ride-share platform has reinforced the company’s role as a demand aggregator, analysts at Bank of America believe.
Uber and Cruise, majority-owned by General Motors Company (NYSE:GM), announced on Thursday that it plans to launch the multi-year partnership next year with an unspecified number of Chevy Bolt-based autonomous vehicles (AVs).
“The addition of cruise reinforces the concept that fleet operators, or eventually individual AV owners, will want to leverage Uber's demand aggregation to increase asset utilization,” analysts wrote.
Details of the partnership are limited, such as the financial terms or how many vehicles will be deployed, but analysts noted that Cruise has a fleet of about 1,200 vehicles and previously operated in San Francisco, Austin, Dallas, Houston, and Phoenix with tests in Miami before halting its operations in October.
Additional AV announcements should improve sentiment on Uber’s long-term AV strategy, analysts added.
“Given Cruise's recent service disruption and limited early details on the Uber/Cruise partnership, we think an expanded partnership with Waymo (possible) or new partnership with Tesla Inc (NASDAQ:TSLA) (not expected near-term) would be a bigger near-term positive for Uber's stock,” analysts wrote.
“We have highlighted that AV competition is good for potential long-term Uber partnership economics, and Tesla and Amazon.com Inc (NASDAQ:AMZN)'s AV investment could be a long-term net positive.”
But they noted that AVs are still in the early stages and any financial implications for Uber are likely several years out.
The bank’s analysts repeated their ‘Buy’ rating on Uber and a $88 price target.
Shares of Uber traded flat at about $73 per share on Friday morning.