Grab Looks to Driverless Technologies for Growth
Grab is working closely with the Singapore government on self-driving vehicles
Southeast Asian ride-hailing and delivery giant Grab is leaning into driverless technologies to boost market penetration in the region.
The Nasdaq-listed company, which posted four straight quarters of net profit for the first time, said its artificial-intelligence strategy has helped it to keep costs down and boost earnings. Now, it has its sights on delivery drones and self-driving vehicles.
Grab is working closely with the Singapore government on self-driving vehicles, but a high bar on safety protocols and training drivers means that “it’ll take time,” Chief Financial Officer Peter Oey said in an interview.
“We’re not going to rush,” Oey said.
Anthony Tan, chief executive and co-founder of Grab, said in an earnings call Thursday that the company is “leaning heavily” into the opportunity for autonomous vehicles across Southeast Asia, describing it as “very, very top of mind for us.”
Tan added that the company has been working closely with regulators across the region to study the implications of self-driving vehicles and drone deliveries while thinking about the rollout in “a safe, affordable way.”
In September, Grab plans to launch a pilot study in conjunction with property developer Megaworld for drone deliveries in the Philippines. Grab, which hopes to conduct more such studies in the region, has also been testing an autonomous shuttle bus. It partnered with South Korea’s A2Z to launch the service for its employees in Singapore earlier this month.
Announcements about more pilot programs for autonomous vehicles will be made in “a matter of months”, Tan said.
As companies race to dominate the self-driving market, Chinese companies are striking deals around the world in the hope of breaking even and improving economies of scale.
Grab, for example, has recently partnered with China’s WeRide to study the technology.
Such technologies “hypothetically would help reduce costs long term, but it’s way too early to consider that right now” for Grab, said Kai Wang, Asia equity market strategist at Morningstar.
Oey said that Singapore’s tough regulations for taxi licenses mean that it won’t be easy for competitors to penetrate the market in the near term.
“We feel that we’re in a prime position to really lead that charge” when it comes to robotaxis in the city-state, Oey said.
Grab, which makes most of its money from its food delivery and ride-hailing businesses, expects consumer demand for its services to hold up despite economic headwinds. The Singapore-based company has backed its revenue and Ebitda guidance for the year.
Its investments into products focused on affordability seem to have paid off during a time of uncertainty.
Saver rides, which now account for a third of transactions in the segment, helped Grab attract a significant number of new users.
Initiatives such as group orders and family accounts for deliveries also reported strong growth. Subscribers of Grab’s loyalty program have also been driving higher average spending and order frequency, it said.
“You can always create great products, but if you can’t make it affordable, it’s tough,” Oey said.
Grab also rolled out AI tools for merchants and drivers, which have helped increase their earnings, Oey said. Regional corporate costs, which include cloud and software spending, are expected to rise by about 10%-12% for 2025. But Oey said that the increase remains within expectations, given their boost to Grab’s topline growth.
“We’re obviously going to continue to drive profitability. It’s really important for us,” Oey said.
While Grab’s customer base is still expanding, Morningstar’s Wang said that growth could decelerate after 2025 as existing markets become more saturated.
“Expanding significantly beyond their specified margin targets could be challenging given the user acquisition costs needed to attain incremental customers,” Wang said.