Uber (UBER) is developing a digital and physical application programming interface that any autonomous vehicle provider can connect to, offering a wider moat than just a fragmented partner base, RBC Capital Markets said.

WeRide, Uber's AV partner in the Middle East, believes that competitors' cost and technology advantages are shrinking, especially regarding the no lidar approach, according to the Thursday note.

WeRide and Uber agreed that available capital or technology are not the main limits on scaling. The main constraints are regulatory approvals and demonstrating safety improvements, where incident risk remains high.

The brokerage added that Uber's recent autonomous vehicle partner deals are more profitable and now the company has a choice between passing savings on to customers or strengthening its bottom line. Given Uber's strong core profitability, the firm expects the company to lower prices and drive more volume.

RBC has an outperform rating on Uber with a price target of $105.

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