It’s no secret that 2020 has been a rough year for Uber. With the COVID-19 pandemic forcing people to avoid rideshare services, it has had to rely on its other segments. While Uber Eats is practically built for the pandemic, it isn’t enough to support the company.
As such, Uber has been offloading some of its money-losing segments in recent months. The latest arm to go is reportedly its flying taxi business. According to Axios, Uber is in serious talks to sell its Uber Elevate segment to a secretive startup called Joby Aviation.
It has been several years since Uber first signaled its interest in the flying taxi space. The company published a whitepaper in 2016 detailing how flying taxis could drastically decrease the time it takes to travel between popular cities.
It started working on ways to get a flying taxi business off the ground (no pun intended) and launched helicopter rides in 2019. Uber offered riders trips from Manhattan to John F. Kenney International Airport, but the service never really caught on.
Part of the failure can be attributed to the fact that Uber’s plan relied on electric aviation—a technology that is still in its infancy. Likewise, there is a massive overhead cost associated with building the infrastructure and “skyports” needed for air taxi transportation. That doesn’t even account for the regulatory nightmare of getting its service approved.
For Uber, the idea of flying taxis might not have panned out. However, Joby Aviation hopes that it can create a different outcome. The startup has been working with Uber for some time on its air taxi project.
It was created by inventor JoeBen Bevirt in 2009. Joby operated in secret until 2018 when it raised $100 million from Toyota and JetBlue. Those funds were used to develop a prototype electric aircraft that the startup hopes to use for its own air taxi business.
In January, Joby scored an additional $590 million in venture capital funding and announced that it was teaming up with Toyota. It hopes to use a vehicle with six rotors and room for five passengers that can take off vertically and reach a top speed of 200 mph.
At this point, the financial details of the transaction between Uber and Joby remain unclear.
Will it Work?
Despite the industry’s potential, air taxis are a technology that is questionable at best. Simply put, electric-based aviation isn’t ready to support fully-fledged transportation services. That being said, an electric vehicle is essential for any service that wants to keep its prices within a reasonable range for most consumers.
It will be interesting to see how the field develops in the coming years.
Meanwhile, Uber has plenty of question marks of its own. The pandemic has clearly taken a toll on the rideshare service. Recently, CEO Dara Khosrowshahi has been aggressively trying to push the company towards profitability. The timing for that couldn’t be worse.
Uber is also reportedly in talks to sell its self-driving division to a startup called Aurora Innovation. By offloading its forward-thinking segments, Uber puts itself in a position to focus on current rideshare technologies as the pandemic subsides. Whether or not there is still potential for profit in that space after COVID-19 remains to be seen.