Uber in a surprising move is selling its self-driving car unit, Uber Advanced Technologies Group (ATG), to self-driving car startup Aurora, according to a statement made by the company on Monday.
The ridesharing company said the move would accelerate its goal to achieve “profitability” amidst the setbacks of COVID-19. In an era when autonomous vehicles are becoming a thing, Uber’s move to sell ATG and invest in Aurora has been borne out of a perceived future where driverless vehicles become the new normal.
Last year, ATG raised $1 billion from many investors including Toyota and Softbank at a valuation of $7.25 billion, but its valuation has since plunged.
Reuters reported that Uber is also investing $400 million in Aurora, in a deal that valued Aurora at $10 billion according to sources. Uber will hold about 26% ownership interest in Aurora on a fully diluted basis, according to the company’s filing statement.
The report said Uber and Aurora will enter into a collaboration agreement to launch self-driving vehicles on the Uber ride sharing network.
Uber’s Chief Executive Officer Dara Khosrowshahi told Reuters in an interview that the sale will accelerate the ride-hailing company’s goal to achieve profitability on an adjusted basis by the end of 2021.
The move also underscores rising interest in self-driving technology. Last week, AutoX launched one of the most efficient robotaxi in Shenzhen, marking a milestone in driverless vehicle technology in China.
The company released a video showing the robotaxi driving around the city of Shenzhen, observing traffic rules and stopping when necessary for passenger to get in or alight.
Google was the first to set the unmanned wheels moving with its Waymo project that has successfully tested autonomous cars in U.S. cities. Tesla is also working to achieve its target of running self-driving ride-hailing cars in the near future. A target it previously set for 2020 but fails to meet.
The growing interest has made startups of autonomous vehicles targets of investors.
Nevertheless, Uber has been working to have a better earning report next year after 2020 financial woes. COVID-19 lockdowns, lawsuits and state of California’s attempt to compel gig companies to declassify their workers as contractors, increased the economic troubles of the cab company this year.
Uber reported gross bookings of $14.7 billion in Q3, recording a decline of 10% compared to the same quarter last year. Bookings generated $3.1 billion revenue for the company, 18% decline compared to the same period a year ago. Uber recorded a third quarter loss of $1.1 billion.
California is Uber’s largest market and has been hardly hit by the pandemic. On Monday, Governor Gavin Newsom imposed new restrictions that will confine Californians to their homes, following the recent surge in COVID-19 cases in the United States.
The development means that Uber will have to rely on its essential service (food delivery) once again to stay in business during the restriction. But it is a situation it is trying to avoid in the future with robotaxis.
Following the outbreak of coronavirus and the exigencies it ushered in, authorities saw an urgent need to place robots in many fields of human services, especially in areas where there is human to human contact. Therefore, there has been accelerated approval of robotic services by regulators recently.
Self-driving cars would have been operational during lockdowns, and help to elevate movement. Consequently, Uber and other companies are working to fix the friction of restricted human movement in times of novel health crises by making a push for autonomous vehicles.