US-based Uber Technologies sold its self-driving car division to Aurora Innovation, the American self-driving technology firm, and took a share in the startup.
The move marks Uber’s withdrawal from its vision for an autonomous taxi fleet to concentrate on making a quarterly profit next year after the pandemic crushed revenue.
The transaction would value Aurora at $10 billion. Uber would get a 26 percent ownership stake in the company in return for investing $400 million in Aurora. When counting the stakes owned by the employees and investors of the autonomous driving division of Uber, the number increases to 40 percent. Aurora’s board will be joined by Uber Chief Executive Officer Dara Khosrowshahi and another yet-to-be-named person representing Uber.
The price tag is a comedown for Uber, whose Advanced Technologies Group (ATG) self-driving division raised cash at a $7.25 billion valuation last year. Following Uber’s investment, the deal with Aurora values the unit at just $4 billion. The deal, expected to close during the first quarter of 2021, also ensures that when Aurora releases its self-driving vehicles, they’ll launch on Uber’s network.
Aurora can get hundreds of engineers and access to one of the biggest ride-hailing networks in the world by integrating Uber’s self-driving car unit. The deal will give Uber a major stake in one of the most ambitious autonomous driving start-ups in the US. Uber has slashed high-profile cash-burning projects this year in a bid to make a profit in 2021.
In recent months, the unit’s long time frame and high costs concerned Uber’s investors SoftBank Group Corp., Benchmark and others, who have been privately urging Mr. Khosrowshahi to reconsider the autonomous driving strategy.
During ATG’s short history, it has made progress building and testing autonomous driving systems, but also struggled amid a tragic pedestrian fatality caused by one of its autonomous cars and the sector-wide reckoning that even the most basic self-driving vehicles will take significantly more time and money to develop than previously expected.
In a joint statement, Aurora and Uber confirmed the deal. The companies said the group would first focus on driverless trucking and later turn to more complicated light vehicles carrying passengers.
“It works well for both of us. We’re excited to have them team with us, and we’re excited to have Dara join our board,” said Aurora CEO Chris Urmson.
Even after combining forces, Aurora and ATG face stiff competition from more developed and better funded rivals. Waymo, the subsidiary of Alphabet Inc that also owns Google, which has logged tens of millions of miles in more than two dozen cities, announced earlier this year it had raised money from auto manufacturers and private equity groups to expand to new locations.