Uber has abandoned its efforts to develop its own self-driving car and will instead trade its operations for a minority stake in Aurora, a driverless vehicle start-up supported by Amazon and Sequoia, with a significantly reduced valuation.
The deal ends one of the most ambitious attempts to develop a fully autonomous vehicle, in which Uber outstripped his rivals looking for a fleet of autonomous taxis on the road.
However, his efforts were marred by tragedy when woman was killed in an accident involving one of the cars in Tempe, Arizona, in 2018, and investors from Uber urged the company to focus on making its core ridesharing business profitable.
Uber will move its 1,200-employee autonomous driving unit to Aurora, which currently has 600 employees, and invest $ 400 million. Aurora was valued at $ 2.5 billion after a $ 530 million investment in 2019 led by Sequoia; he said the Uber deal would quadruple its valuation to $ 10 billion.
Uber’s standalone business represented a significant cash loss for the company, but was valued at $ 7.25 billion as recently as April 2019, when Toyota and SoftBank took minority stakes in the unit before the group’s IPO.
Together, Uber and its partners will emerge with 40% Aurora. Only worth $ 4 billion at Aurora’s new valuation of $ 10 billion, which is a significant reduction in the unit price in April 2019. Uber itself will hold a 26% stake in Aurora and Dara Khosrowshahi, Managing Director of Uber, will take a seat on Aurora’s board of directors.
Eric Meyhofer, the head of the autonomous driving unit, will not be joining Aurora and will be leaving Uber.
Aurora – founded by a trio of executives who played key roles in creating self-drive programs at Google, Tesla and Uber – is known for its strong financial backing. But its strategy of working closely with major automakers failed, with early partners Volkswagen, Hyundai and Fiat Chrysler all shifting to supporting technology from rivals Aurora.
The Uber deal means Aurora could eventually deliver its driverless technology to the world’s largest fleet of transport vehicles. Toyota’s involvement in Uber’s autonomous driving project could also give Aurora access to a major automaker as a partner.
“It’s a bit of a coup and we’re extremely excited about it,” Chris Urmson, chief executive of Aurora, told the Financial Times.
In 2016, after Travis Kalanick started the division, the Uber co-founder called the self-driving challenge “fundamentally existential for us.” The fear was that Google could undermine all of its business with a cheaper and safer car transport company.
Uber acted quickly and in 2016 invested $ 680 million in driverless start-up Otto. He predicted that there would be 75,000 autonomous vehicles on the roads by 2019.
But his early hopes faded and the unit instead became a public relations nightmare after the Tempe crash. This year, the autonomous driving unit and “other tech programs” have lost over $ 300 million on an adjusted ebitda basis.
In 2018, the company agreed to donate $ 245 million of its inventory to Waymo, the stand-alone subsidiary of Google Alphabet, to settle a trade secret dispute out of court.
During the case, Mr Kalanick has spoken out to defend himself against allegations that he conspired with former Google employee Anthony Levandowski to bring confidential documents relating to Google’s autonomous driving program to Uber.
Uber recently decided to sell or shut down non-essential businesses and could then sell Elevate, its flying car project. In May, Uber moved its Jump bikes division to Lime as part of a $ 170 million investment in the scooter company.
In a statement, Khosrowshahi said the deal would put Uber’s advanced technology group in “pole position” to deliver on the promise of driverless vehicles.
“Few technologies hold the promise of improving people’s lives with safe, accessible and environmentally friendly transportation as autonomous vehicles,” he said.