Uber made an important decision, it is selling its self-driving car division to the autonomous vehicle startup Aurora Innovation. Based on the preliminary information, the deal will close in the first quarter of 2021, values Advanced Technologies Group (ATG) at approximately $4 billion. As a reminder, the unit was valued at $7.25 billion in April 2019 when Softbank, Denso, and Toyota took a stake.
People should take into account that Dara Khosrowshahi who serves as the CEO of Uber will join the company’s board. This is not the end of the story the ride-sharing giant will invest $400 million into the company.
According to a regulatory filing accompanying the deal, Uber and ATG investors as well as employees will own a 40% stake in Aurora. Importantly, Uber alone will hold a 26% stake. Interestingly, Aurora CEO Chris Urmson previously led Google’s self-driving car program.
Uber and Aurora also reached a strategic partnership to deploy self-driving cars powered by Aurora on the Uber app.
As a reminder, the ride-sharing giant founded its self-driving efforts in 2015 in Pittsburgh when it recruited 40 researchers from Carnegie Mellon University. Notably, the operation later called Uber ATG would later grow to more than 1,000 employees. The ride-hailing company believed developing self-driving cars was essential for it to survive, given that self-driving cars might make human-driven vehicles expensive and irrelevant.
Uber and self-driving cars
The ride-hailing giant expects the deal to reduce its costs and contribute to its plan to be profitable excluding certain costs in 2021. Interestingly, several years ago it bought a self-driving truck startup, Otto. A former Google autonomous vehicle employee, Anthony Levandowski was the co-founder of this company.
Importantly, Waymo, Google’s self-driving company filed a lawsuit against the ride-hailing giant in February 2017. Uber dismissed Levandowski after failing to cooperate with the company on the case. In 2018, Waymo and the ride-hailing giant settled a trade secrets trial. Waymo received about $245 million in Uber stock, and the ride-hailing giant agreed not to use proprietary Waymo information.
Moreover, the partnership will also give Aurora a connection with an auto manufacturer, Toyota. As a reminder, Toyota invested in Uber ATG. Importantly, Aurora is developing sensors and software for self-driving vehicles. However, it will need a partner to manufacture the vehicles. Interestingly, competitors such as Waymo, Cruise, Argo AI all made deals with automakers.