Uber Redirects Layoff Savings to Cheaper Rides and Autonomous Vehicles

SAN FRANCISCO — Uber Technologies Inc. plans to redirect savings from its largest corporate layoffs since the pandemic toward a $1 billion-plus expansion into autonomous driving and lower consumer ride fares.

The company reported net income of $1.015 billion on revenues of $10.7 billion in the second quarter of 2024. Its latest quarterly earnings also exceeded expectations, even as Uber prepares to cut approximately 10% of its corporate workforce, or about 3,300 positions.

Speaking at the Goldman Sachs Communacopia + Technology Conference, Chief Executive Officer Dara Khosrowshahi said Uber would not simply retain savings from the workforce reduction and lower insurance costs. The company intends to put those funds back into its platform, including through reduced ride prices aimed at sustaining and expanding its active user base.

The planned reduction is designed to streamline management layers. It will be Uber’s most substantial workforce reduction since the early months of the COVID-19 pandemic in 2020, when the collapse of global travel forced the company to lay off roughly 6,700 employees. “Some companies wait,” Khosrowshahi said, adding that Uber chose to act from a “position of strength versus weakness.”

More than $1 billion of the savings is earmarked for Uber’s autonomous vehicle (AV) network. The company is intensifying its rivalry with Alphabet Inc.’s Waymo while preparing for wider competition from General Motors’ Cruise and Tesla Inc.’s planned robotaxi initiatives.

Uber sold its own cash-intensive self-driving division, Advanced Technologies Group (ATG), to Aurora Innovation in late 2020 after years of high development costs and regulatory scrutiny. It has since moved toward an integration-and-partnership model, recently expanding its booking partnership with Waymo in Austin, Texas, and Atlanta, Georgia. Uber also signed a multi-year deal with Cruise to deploy autonomous vehicles on its network starting in 2025.

The restructuring follows a broader turnaround under Khosrowshahi, who took over in 2017 after co-founder Travis Kalanick’s departure. Uber moved from a cash-burning startup to a profitable enterprise and posted its first full year of operating profitability in 2023. The company is now making the capital shift while facing substantial financial liabilities abroad.

In the European Union, Uber is dealing with the fallout from an almost $1 billion fine connected to its operations between 2018 and 2022. The Dutch Data Protection Authority serves as Uber’s lead privacy regulator because the company’s European headquarters are in Amsterdam.

The regulator ruled that Uber violated the European Union’s General Data Protection Regulation (GDPR) by automatically suspending or deactivating drivers suspected of fraud or receiving low ratings. Those decisions were made through automated algorithms without human review, which the regulator said violated GDPR protections against automated decision-making involving significant financial or personal consequences.

Analysts have noted that promises of lower prices after major restructurings do not always materialize. In August 2023, T-Mobile US Inc. announced plans to lay off 5,000 employees, roughly 7% of its workforce. CEO Mike Sievert said the restructuring would allow the company to provide better value and an improved customer experience. By May 2024, however, T-Mobile had raised prices by up to $5 per monthly voice line on several older legacy plans. Uber’s European compliance battles add to the operational and financial hurdles it faces while optimizing its corporate structure.