Uber Expands AV Partnership with Baidu in Dubai, Reinforcing Long-Term Strategy Amid Near-Term Profitability Concerns

What happened

Uber and Baidu have expanded their partnership to integrate Apollo Go's driverless rides into the Uber app in Dubai, targeting the city's goal of 25% autonomous trips by 2030. This move aligns with Uber's documented strategy of scaling autonomous vehicle supply through external partners rather than in-house development, as highlighted in recent SEC filings. It builds on existing AV alliances, such as with Waymo in the U.S. and WeRide in the Middle East, which are central to mitigating disintermediation risks from competitors. However, the financial impact remains minimal in the near term, as AV deployments are still nascent and do not address core profitability pressures from insurance and incentive inflation. While this expansion supports Uber's ambition to become a leading AV facilitator, it underscores the ongoing tension between long-term strategic positioning and short-term earnings durability.

Implication

Strategically, the Baidu partnership in Dubai is another incremental step in Uber's multi-partner AV approach, aiming to secure its role as a booking layer against disintermediation threats. Financially, it offers no near-term earnings lift, as AV rides contribute negligibly to current EBITDA and do not mitigate variable cost pressures from insurance and incentives. Investors should scrutinize whether such partnerships can scale profitably without increasing Uber's cost base, especially as competitive AV rollouts accelerate globally. The deal highlights regulatory tailwinds in specific markets but does not reduce the urgency for Uber to demonstrate margin expansion and guidance reliability in upcoming quarters. Ultimately, while supportive of long-term optionality, the stock's performance will hinge more on observable progress in EBITDA margin versus Gross Bookings and concrete AV deployment milestones beyond headline announcements.

Thesis delta

The new article validates Uber's AV partnership strategy, aligning with the bull scenario where partner robotaxi deployments expand city count and fleet size. However, it does not shift the core thesis, which remains contingent on margin durability against cost inflation and evidence of scalable AV integration within the next 6-18 months. Investors should treat this as confirmation of strategic direction rather than a material catalyst, maintaining focus on quarterly guidance execution and cost control metrics.