Uber is selling its self-driving car division to Aurora, a self-driving car start-up. The sale marks the end of Uber’s five-year attempt to develop self-driving vehicles that was marred by litigation and a fatal crash.
Uber has spent hundreds of millions of dollars on the self-driving car project that executives for the company once believed was a key to becoming profitable.
Now Uber has agreed to a deal with Aurora that will have Uber take a 26% stake in the company and will invest an additional $400 million.
“What’s crucial is for us to have access to the very best and leading autonomous technology out there. What we want to make sure is as that technology is developed, it’s developed for Uber network and is available for the Uber network at scale,” said Uber CEO Dara Khosrowshahi.
Aurora is a Silicon Valley-based start-up that makes software for autonomous vehicles. Uber will now be joining its list of investors, which includes tech giant Amazon.
The deal between the two companies is expected to close in the first quarter of 2021. The self-driving car division of Uber is valued at approximately $4 billion in the deal. Aurora is valued at roughly $10 billion in the transaction.
According to Aurora’s chief executive, Chris Urmson, Aurora’s first product will not be a robot taxi that would serve to benefit Uber’s ride-hailing business. Instead, the company will likely produce a self-driving truck for its first real autonomous vehicle. Urmson believes autonomous trucks have a better chance of success in the near term because long-haul truck driving on highways is more predictable and does not involve passengers.
This deal marks the end of Uber’s tumultuous journey to cut the expense of drivers out of its business model and move into autonomous vehicles.
Uber started its work on self-driving vehicles in 2015 when it announced a partnership with Carnegie Mellon University’s National Robotics Center. Uber then hired 40 engineers and scientists away from Carnegie Mellon and established the foundation for its autonomous vehicle unit. The division is called the Uber Advanced Technologies Group, or ATG for short. The ATG division eventually had 1,200 employees.
Uber then acquired the autonomous trucking start-up Otto, which was valued at $680 million. The company was led by Anthony Levandowski, a former Google engineer.
However, the acquisition posed problems for Uber when Waymo, Google’s self-driving company, sued Uber in February 2017, alleging trade secrets and intellectual property theft. The suit was eventually settled in February 2018. The settlement granted Waymo roughly $245 million in Uber stock, and Uber agreed not to use proprietary Waymo information.
Troubles for Uber’s self-driving vehicle division did not end there. The company faced another setback when one of its test vehicles in Tempe, Arizona, struck and killed a pedestrian.
The fatality ultimately led to Arizona’s governor Doug Ducey suspending Uber’s ability to test on state roads, and Uber was forced to shut down its operations in Arizona in May 2018.