<div id="readability-page-1">Technology is transforming transportation in an unprecedented way. Look no further than Uber Technologies (UBER 0.83%) and Tesla (TSLA 1.35%) for examples. Both companies have already altered automotive transport in significant ways. Uber famously reimagined ride-hailing, while Tesla made electric vehicles (EV) a viable alternative to gas-powered cars. Now, they are bringing self-driving automobiles to the masses. Does this latest technological upheaval mean one of these businesses is a great investment for the long haul? Let's examine Uber and Tesla to arrive at an answer. <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjQwMzMvYXV0b25vbW91c192ZWhpY2xlLWdldHR5aW1hZ2VzLTEzNDkzNzUxMzMuanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="393" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MjQwMzMvYXV0b25vbW91c192ZWhpY2xlLWdldHR5aW1hZ2VzLTEzNDkzNzUxMzMuanBnJnc9NzAw"/>Image source: Getty Images. </div> <h2>Uber's approach to automated automobiles</h2> Uber has come a long way from its origins as a taxi-service alternative. While its core ride-sharing business remains prominent, the company expanded into delivery services under its Uber Eats brand and now eyes a future where autonomous vehicles (AVs) are part of its offerings. Uber originally attempted to build its own self-driving system but sold its tech in favor of a partnership strategy. This is a smart move. Not only do partnerships allow Uber to avoid the high costs of constructing a driverless fleet, it enables the business to join forces with market leaders around the world. For instance, it forged partnerships with Alphabet-owned Waymo in the U.S., as well as U.K.-based Wayve. Uber's Waymo alliance is testing self-driving services in Austin and Atlanta. According to Uber CEO Dara Khosrowshahi, the Waymo-powered vehicles are busier than the humans driving for Uber, stating, &#34;the average Waymo in Austin is busier than 99% of Austin drivers.&#34; In addition, the rest of the company is doing well. Sales rose 14% year over year to $11.5 billion in the first quarter. This translated into Q1 free cash flow (FCF) of $2.3 billion, up 66% year over year, and net income of $1.8 billion compared to a net loss in the prior year. <h2>How Tesla tackles autonomous vehicles</h2> Tesla may have started as a consumer car company, but it too is getting into autonomous automobiles. CEO Elon Musk shared his vision for the business, stating, &#34;The future of the company is fundamentally based on large-scale autonomous cars and ... vast numbers of autonomous humanoid robots.&#34; He went on to predict, &#34;we'll start to see the prosperity of autonomy take effect in a material way around the middle of next year.&#34; Tesla is on its way to fulfilling Musk's prediction. In June, it launched a limited pilot program for its robotaxi service in Austin. The company's AV strategy is to handle the entire end-to-end process from car construction to delivering the service to end customers. This capital-intensive approach makes more sense for Tesla than Uber, since the former already owned vehicle-manufacturing infrastructure and the necessary software capabilities. Tesla began its robotaxi service using a modified version of its Model Y vehicles but plans to construct a dedicated autonomous car with no steering wheel called Cybercab. The company is taking steps toward its future, but for now, its business is experiencing headwinds due to the current macroeconomic environment. President Trump's mercurial tariff policies are impacting consumer spending with automobile tariffs seen as raising car prices. Tesla also made factory changes that temporarily limited vehicle production, contributing to a 9% year-over-year decline in Q1 revenue to $19.3 billion. Its Q1 net income also dropped to $420 million from 2024's $1.4 billion. On the bright side, its FCF increased 126% year over year to $664 million thanks to reductions in capital expenditures. <h2>Making a choice between Uber and Tesla stock</h2> Uber and Tesla's AV efforts position both to benefit from the self-driving sector's massive growth in the coming years. Industry forecasts estimate the global AV market will expand rapidly from 2024's $2 billion to $44 billion by 2030. Yet even with that growth, the AV market will be only a fraction of the ride-hailing industry Uber operates in, which is projected to hit $105 billion in 2030. Moreover, the winners in the autonomous car sector won't be known for years as the industry grows. This makes Uber's reliance on partners an attractive approach. It reduces the cost to participate in the market and provides flexibility to collaborate with multiple players in the space. But before deciding which business to invest in, another factor to consider is stock valuation. To assess this, here's a look at Uber and Tesla's price-to-earnings (P/E) ratio. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/50c8958152fa9768ce0dd1e9d573e399.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="456" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/50c8958152fa9768ce0dd1e9d573e399.png"/> Data by YCharts. Uber's stock has been on a tear in 2025. Shares are up over 55% through July 3. Even so, as the chart shows, Uber's P/E ratio is at a low level compared to where it was a year ago, and it's far below Tesla's lofty earnings multiple as well. This suggests Uber shares are at a compelling valuation despite the stock's rise this year. Meanwhile, Tesla shares look overpriced. Taking into account Uber's valuation and a growing business with an efficient approach toward autonomous vehicles that limits its risk, Uber is the better stock to buy right now between these two transportation titans. </div>

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Uber and Tesla are at the forefront of transforming transportation with their advancements in autonomous vehicles (AVs). Uber has shifted from ride-sharing to partnerships for AV development, reporting a 14% sales increase and significant free cash flow. Tesla, while facing revenue declines, is launching a robotaxi service and plans a dedicated autonomous vehicle. The AV market is projected to grow significantly, with Uber's partner strategy offering flexibility and lower costs. Despite Uber's stock rising 55% in 2025, its valuation remains attractive compared to Tesla's higher earnings multiple.

- Technology is significantly transforming transportation, with Uber and Tesla leading the charge in autonomous vehicles.  
- Uber has shifted from ride-sharing to partnerships for self-driving technology, reporting a 14% sales increase and a net income of $1.8 billion in Q1.  
- In contrast, Tesla faces challenges with a 9% revenue decline but has launched a robotaxi pilot, yet Uber's lower valuation and strategic partnerships make it a more attractive investment option.

Best Stock to Buy Right Now: Uber vs. Tesla