Is Uber's Self-Driving Pilot Program a Sign That Its IPO Is Finally Coming?

By Markets Fool.com

One of the four self-driving Ubers that hit the road this week in a pilot program in Pittsburgh. Image source: Uber Technologies.

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Uber Technologies said on Wednesday that "the world's first self-driving Ubers are now on the road." The ride-hailing giant has put four vehicles into service equipped with its prototype self-driving system (with backup drivers on board) giving rides to Uber customers in Pittsburgh.

It's a milestone in the industrywide race to fully autonomous vehicles, and it raises two questions: First, when will Uber arch-rival Lyft launch its own self-driving pilot program with partner General Motors (NYSE: GM)? And second, is this program a message to potential Uber investors about its long-awaited IPO?

What Uber said about its self-driving pilot program

In a blog post signed by CEO Travis Kalanick and Uber's vice president of self-driving technology, Anthony Levandowski, the company said it would invite its "most loyal Pittsburgh customers" to request a self-driving Uber when one of the vehicles is available.

That probably won't be often, at least at first. For now, there are only four self-driving vehicles available to provide rides, though Uber says there are more on the way. Each of the vehicles will have two Uber employees sitting in front to monitor the car's systems -- and to take over driving in situations the technology isn't yet ready to handle.

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Uber noted in its blog post that its recent acquisition of Otto, a Silicon Valley start-up that had been working on driverless-truck technology, had helped bolster its self-driving engineering efforts. (Levandowski was the founder of Otto.)

What it means for Uber: A proof point on the way to an ambitious vision

It's a step closer to realizing Kalanick's vision of an entirely automated ride-hailing service. That vision probably won't be realized for several more years (at least), but having actual self-driving Ubers on the road, even under significant limitations, is a huge milestone for the company.

It's significant for another reason: As Uber's program expands, more people will be able to get a taste of what it's like to ride in a self-driving car. As more people experience the technology, interest and demand for it will likely rise.

What it means for Lyft: Second place, but will it matter?

It means that Lyft got beat. But Uber's victory may not mean much in the long run, because the first self-driving Lyft vehicles probably aren't far behind.

Back in May, Lyft executives told The Wall Street Journalthat the company would begin its own pilot self-driving program in an unnamed American city "within a year." That program is expected to use electric Chevrolet Bolts equipped with the latest version of GM's self-driving technology, which is believed to have made significant advances since GM's acquisition of self-driving start-up Cruise Automation.

It's possible GM isn't quite ready to put its technology to the test with real Lyft passengers. It's also possible the partners are simply waiting for Chevy Bolts: GM's first long-range electric car won't be in full production for another couple of months.

Still, GM has hinted that some of the first production Bolts are destined for ride-hailing and car-sharing duties. It's possible Lyft's own pilot program will be up and running before long.

The upshot: Another step toward Uber's long-awaited IPO?

Investors have eagerly awaited a chance to buy shares of Uber on the open market. In recent months, we've seen some signs that Uber is gearing up for its long-awaited offering -- most significantly that it unloaded its money-torching China business.

This self-driving pilot program might be another sign. It may be Kalanick's way of showing potential investors that Uber's self-driving research program isn't just talk, but rather something that can and will lead to a major shift in its business. It's just a tiny pilot program for now, but you don't have to squint too hard to see the future from here.

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John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.