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Uber Gets Run Over by Its Own Subprime Auto Leases

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Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#71

Post by jaclaz »

montecarl wrote: post #68
jaclaz wrote: post #55

Earlier quoted context omitted.

Naaah, that depends on quality of oil (and of course characteristics of the engine), as hinted it is a long standing dispute. A number of people (particularly in the US, but not only) change their oil every 3-5,000 miles for reasons like: - my father always changed oil every 3,000 (or 4,000 or 5,000) miles - a friend of mine who races changes it every 2,500 miles so changing it every double that is appropriate - the…

Can you explain what is bad about "cold starts after long periods of inactivity"? Or provide a reference? It sounds interesting, but I do not know enough about how engines work to understand what would be different about starting a car after one day or one month of not driving it.

In a nutshell?

It's complicated, but basically an oil has two main functions:

1) lubricate

2) circulate and take away all impurities and metal debris (which are then - as much as possible - filtered and absorbed by the filter and - at least the steel ones - by one or more magnets), i.e. to "clean" (continuously)

So the oil has many components inside, some of which with different weight (i.e. that may tend to separate) some of them that may be affected by water (the air that inevitably enters the engine can condensate) some by the oxigen in the air itself (i.e. oxidate).

Moreover some metal parts in the engine that are normally covered by a thin film of oil may well, after some longer period of inactivity "dry up" and thus develop some oxidation themselves or "run dry" thus creating more debris (that will be washed at next start and thus contaminate the oil).

And then there is the temperature cycles, an oil needs to be fluid enough when very cold yet do not become too fluid when heated, which adds the need of more components that may suffer from these cycles.

As an example in some industrial setups (think of static diesel electric generators) the oil in the engine is pre-heated electrically to keep it always from going under a given temperature.

All in all keeping it continuously mixed/moved and within a given temperature range is "better" for the oil.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#72

Post by aphextron »

Clanan wrote: post #36

Uber won't just be out the $360 million on the cars. They'll be out the 40,000 drivers who may not be able to get another leased car.

I wouldn't worry about that too much. Their entire business model is predicated on the at-will disposability of their "employees".

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#73

Post by L_Rahman »

charlesdm wrote: post #53
URSpider94 wrote: post #50

Earlier quoted context omitted.

Not that they are doing badly, but to some degree they don't have to perform well to be successful. Their primary goal is to transform a currently-limitless stream of oil money into a sustainable source of wealth and income when the spigot turns off in a generation or two. Same for China overseas investments, it's a way to turn RMB-denominated cash into hard assets in democratic countries with stable political enviro…

This is true. I had a friend, who pretty much built a shovelware game, talk a chinese publisher into doing a deal. He banked $200k. I don't even get how that deal even could be made. Hell, he didn't even understand it.

The Chinese mobile gaming market is one of the hottest in the world right now. Tencent (the people who make WeChat) pull in USD $1BN each quarter just from games.

There was and possibly still is a lot of dumb money in that space right now.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#74

Post by dragonwriter »

aphextron wrote: post #70
beambot wrote: post #59

Earlier quoted context omitted.

Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) For people who don't want to look it up... Some of the biggest are pension funds! It's not just high net worth individuals or companies, it's also mom & pop retirement funds. https://www.quora.com/Who-are-the-biggest-investors-limited-...

>Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) The Fed, with their policy of Quantitative Easing over the past 5 years.

The Fed QE policy was over about 5 years (late 2009 to late 2014), but not “the past 5 years”.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#75

Post by [deleted] »

aphextron wrote: post #70
beambot wrote: post #59

Earlier quoted context omitted.

Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) For people who don't want to look it up... Some of the biggest are pension funds! It's not just high net worth individuals or companies, it's also mom & pop retirement funds. https://www.quora.com/Who-are-the-biggest-investors-limited-...

>Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) The Fed, with their policy of Quantitative Easing over the past 5 years.

[deleted]

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#76

Post by ChuckMcM »

Wow, if even half of that is accurate that is pretty amazing. I always wonder about such stories on how much oversight is involved. Clearly for a company moving fast you have to trust the people closest to the situation to make the best decision, but do you do that when there $600M in play? Do you review their plans and pencil out the math?

It sounds like it will be especially challenging to unwind as well.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#77

Post by riku_iki »

aphextron wrote: post #70
beambot wrote: post #59

Earlier quoted context omitted.

Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) For people who don't want to look it up... Some of the biggest are pension funds! It's not just high net worth individuals or companies, it's also mom & pop retirement funds. https://www.quora.com/Who-are-the-biggest-investors-limited-...

>Now, as a thought exercise: who do you think subsidizes VCs? (I.e. who are the biggest LPs) The Fed, with their policy of Quantitative Easing over the past 5 years.

But Fed is not just giving money for free. VCs will need to return them eventually.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#78

Post by brudgers »

aetherson wrote: post #49
brudgers wrote: post #42

Earlier quoted context omitted.

Uber spent $680 million on the Otto. GM spent $1000 million on Cruise Automation. Neither of these came with tooling and supply chains or production engineering. In the automotive industry, a billion gets some talent and potentially promising intellectual property, not vehicles on the road. Yes, I think the Otto purchase was a bigger waste of money than the subprime leases. On the other hand, it didn't wreck lives by…

I mean, sure, but on the other hand $1B is 36 times lower than $36B. Maybe we're just talking in cross purposes. Obviously if you buy a million cars, you'll be spending tens of billions of dollars. I didn't mean that Uber was hoping to be able to roll out a massive worldwide fleet of driverless vehicles for under $36B. I meant that Uber has to demonstrate a mature technology and business model involving lets say thou…

Cars that are produced in the 1000's or 10,000's tend to run in the $100,000's [1] even when the costs are amortized over the total production of an established manufacturer where startup costs like site acquisition and robots and hiring are already sunk costs.

To better explain, the difference between one and five billion is significant when its my money. But it is not a quantum difference in terms of ordinary automotive manufacturing. Tesla is fourteen years old, has raised billions of dollars and is not relevant at the global scale in terms of production or sales. [2] More importantly, Tesla's differentiation is not self driving technology, it is electric drive trains which have an automotive history going back to the 19th century. Tesla is able to draw on established power technologies and engineering expertise in the production of batteries and electric power systems. Just maybe it will be able to produce a few tens of thousands of $35,000 electric cars a year at some point. I think that the odds Tesla will be first with a full on self-driving vehicle with wide availability are pretty low...but given that it has been working on the idea for about a decade or so, much higher than Uber's ever were.

[1]: To be clear, I am not talking about 2017 Camero's with green leather interior and cherry red paint.

[2]: That's not to say it does not have potential to become so over the next fifteen years.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#79

Post by jff »

pjc50 wrote: post #22
dsfyu404ed wrote: post #9

When I first heard about this program my first thought was "Hahahahaha did nobody at Uber talk to dealership sales department?" Now my thought is "Hahahaha. I was right." Uber basically made a subsidiary that specialized in loans that everyone expects to end with the car repo'd and at auction. It's no surprise they got burnt.

Even more hilarious is that there are companies that do make money out of this kind of predatory lending. Uber can't even get usury right.

That's the end goal of the "We finance everyone!" car dealers, right? Get you in a high interest rate loan and either the client eventually pays it off (paying $15,000 for a car worth $4,000) or they default after 6 months and you take the car back and sell it again.

Re: Uber Gets Run Over by Its Own Subprime Auto Leases

#80

Post by brudgers »

charlesdm wrote: post #45
brudgers wrote: post #31

Earlier quoted context omitted.

Concern over local losses at one company in an investment portfolio is what separates ordinary investors from the class of investors Uber allows to invest. The Saudi Sovereign Wealth Fund is not going to sweat this. The value of Uber is the distribution of possible outcomes weighted for probability. The worst outcome is $0 and that was accepted going in. The reason companies like Uber stay private is to keep out ordi…

Are there any metrics on how well these sovereign wealth funds are actually doing? I often see them making big bets, with some definitely paying off (e.g. Kingdom Holding and Twitter), but I wonder how well they do across the board.

I don't expect to see them launching Gofundme pages:

https://en.wikipedia.org/wiki/Kuwait_Petroleum_Corporation

https://en.wikipedia.org/wiki/Saudi_Aramco

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