Uber Technologies Inc is selling its self-driving car division, Uber Advanced Technologies Group (ATG), to autonomous vehicle startup Aurora in a multibillion-dollar deal. The deal will put an end to a five-year run of Uber’s development of self-driving vehicles that was impaired by a fatal crash and litigation after allegations of technology theft.
Uber are selling their business, ATG, for a reported $4 billion to the Silicon Valley-based startup. Aurora, who is already working on the development of self-driving trucks, cars and delivery vehicles, are also backed by Amazon and Sequoia Capital. As part of the deal, they will collaborate with Uber to launch self-driving vehicles on its food delivery and ride-hailing services.
Aurora, which was founded in 2017, has said that the deal will help it “accelerate” its goal of making autonomous vehicles a reality.
Aurora is among many of the automakers, large technology companies and startups that are looking to develop self-driving car systems. The firm was last valued at $3 billion in September 2019, according to PitchBook data.
Originally, it was estimated that the deal could be worth around $7.5 billion, according to Reuters. However, this was last year, and the deal is now down to roughly $4 billion, which will be completed in the first three months of 2021.
The sale will also include a $400 million investment from Uber in Aurora, with Uber receiving a 26 percent minority stake on a fully diluted basis in return. Despite the sale, Uber said that it will still take an interest in the sector. Dara Khosrowshahi, Uber’s Chief Executive, will join Aurora’s board with the deal also giving Aurora access to a carmaker, Japan’s Toyota, which has invested in ATG.
“Few technologies hold as much promise to improve people’s lives with safe, accessible, and environmentally friendly transportation as self-driving vehicles. For the last five years, our phenomenal team at ATG has been at the forefront of this effort – and in joining forces with Aurora, they are now in pole position to deliver on that promise even faster,” said Khosrowshahi.
“I’m looking forward to working with (Aurora chief executive) Chris (Urmson), and to bringing the Aurora Driver to the Uber network in the years ahead.”
Travis Kalanick, the founder and former Chief Executive of Uber, previously stated that its driverless car subsidiary was critical to the future of the firm since he saw it as a way of reducing costs. However, Khosrowshahi, who replaced Kalanick in 2017, has taken a change in stance over the way in which the company will be focused on by prioritizing its food and taxi services in order to improve its profitability. Khosrowshahi has said that “this essentially advances our path to profitability”.
In 2015, when Kalanick set up the driverless car division in Pittsburgh, Uber were very much ahead of its rivals, like Google and Tesla, in the race to develop “robotaxis”. However, it suffered a major setback in 2018 when an autonomous Uber vehicle killed a woman who was crossing the street in Arizona. Following the incident, Arizona governor Doug Ducey suspended Uber’s ability to test on state roads and Uber shut down their operations there in May 2018, resulting in three hundred workers being laid off. In addition to this, Uber was also sued by Google’s self-driving car project Waymo for alleged technology theft.
The fatality in 2018 was the first death caused by a fully self-driving vehicle and therefore was a huge black eye on the industry which lists safety as one its primary motivations. An Uber test driver, who was supposed to be monitoring the vehicle and intervene if needed, was watching a show on her phone when the self-driving car struck and killed a pedestrian. The National Transportation Safety board blamed the driver for the crash but stated that Uber had instilled an inadequate safety culture at the company.
Chris Urmson, Aurora’s CEO, said in a blog post on Monday that Uber ATG’s safety work was one of the reasons why they acquired Uber ATG. “Throughout the last several years, they’ve also worked tirelessly to build an experienced safety team with diverse backgrounds, ” he said.
Uber’s partnership with Aurora is not exclusive, however. Khosrowshahi said that Uber would continue to work on the development of self-driving technology on several vehicle makes but called the relationship with Aurora “special”. “If the technology becomes real, I think our investment will be money good and then some,” he said.
Led by experts of driverless car efforts at Google and Uber, Aurora said that it has also previously received “significant investment” from Amazon, which is known to be looking at the opportunities presented by driverless delivery vehicles. South Korean carmaker, Hyundai, has also backed Aurora who currently hold offices in four US cities. Aurora competitors such as Waymo, Cruise and Argo AI, have all made deals with automakers.