AUTONOMOUS VEHICLES Uber sells its self-driving car division
As a sign that technological advancement in the auto industry is not being achieved as rapidly as had been predicted, one of the global leaders in the ridesharing business, Uber, has agreed to sell its self-driving car division, the Advanced Technologies Group, to competitor Aurora Innovation.
Ridesharing pioneer Uber recently made a sobering announcement that it was selling its headline-grabbing autonomous vehicle (AV) division, the Advanced Technologies Group (ATG) to Palo Alto, California-based AV platform developer and rival Aurora Innovation. The deal is expected to close in the first quarter of 2021. For some observers, this seemed to be proof positive that Uber believes the adoption of Society of Automotive Engineers (SAE) Level 4 (“high automation”) or 5 (“full automation”) self-driving cars may take place farther into the future than previously thought.
Uber investment in Aurora
However, the deal isn’t just a simple sale; it also gives Uber a 26 % stake in Aurora in exchange for a USD400 million investment that also will see Uber employees and major Uber investors Toyota, Denso, and the Softbank Vision Fund receiving a 14 % ownership stake in Aurora. Aurora, which has about 600 employees, will absorb the majority of Uber ATG’s 1,200 workers. When the deal is complete, it will value Aurora at USD10 billion, a significant premium over its valuations in past years.
To some minds, this outcome shows that while Uber may have doubts about AVs’ short-term potential, the company is not about to give up on them completely. Indeed, as one of the terms of the deal, Uber CEO Dara Khosrowshani will join Aurora’s board of directors, and Uber’s investment (not to mention ATG’s personnel and technological assets) is almost sure to alter Aurora’s strategic vision and business plans.
In recent years, Khosrowshani has looked to cut costs. In the third quarter of 2020, Uber recorded a loss of USD625 million (after reporting a staggering hit of USD5.2 billion in the second quarter of 2020), and the coronavirus pandemic struck the company particularly hard (income was down by 80 % in April 2020 before rebounding). In an effort to cut expenses, Uber committed to cutting thousands of jobs this year and closing more than 40 offices worldwide.
Last year, Uber looked to outside investors to fund ATG, a sign that the company perhaps no longer wanted to be seen as an unlimited resource to finance the unit’s expensive R&D efforts. Uber ATG took a massive public relations hit in 2018 when one of its test AVs struck and killed pedestrian Elaine Herzberg in Tempe, Arizona. The company was barred from operating in the state, was forced to pay an undisclosed legal settlement, and was pressed to immediately alter its testing and development procedures; the AV industry as a whole was shaken by the incident.
Divestment of Uber Elevate
In another recent development—which was also likely a product of cost-cutting—Uber sold Uber Elevate, its flying taxi division, to airborne mobility player Joby Aviation. Uber Elevate had been generating much press, but it’s possible that potential profits for the venture were not as close at hand as Uber had initially envisioned (there were also industry questions of feasibility and environmental impact that have yet to be fully answered). Uber formed the Elevate division in 2016, and its executives had promised functioning flying taxi services in Dallas, Los Angeles, and Melbourne by 2023. Elevate had claimed its electric (zero-emission), four-passenger, vertical-takeoff-and-landing (VTOL) vehicles—made by Joby—will be able to achieve a top speed of 321 kph and a range of 241 kilometers.
Joby had been a partner previously in Uber Elevate, and according to the terms of the deal, Uber will invest an additional USD75 million in Joby (this is on top of an original USD50 million Uber had put into the firm). In the media, Uber referred to the sale as an “expanded partnership” rather than a divestment.
In the meantime, AV platform developer Aurora has had its own share of difficulties as early partnerships with automakers such as Hyundai, Byton, and Volkswagen fizzled out (VW has since switched its technological allegiance in AVs to heavyweight industry player Argo AI) or have yet to bear fruit (Byton suspended operations in the wake of the coronavirus pandemic earlier in 2020). Aurora continues to work on efforts to develop technology for truck AVs, but the acquisition of Uber ATG will likely shift at least some of its focus to Uber investor (and now Aurora shareholder) Toyota.
“We are aware of Aurora Innovation’s acquisition of Uber Advanced Technologies Group (ATG) and look forward to exploring automated vehicle technology collaboration opportunities with them,” declared a Toyota spokesperson.
For his part, Aurora CEO and co-founder Chris Urmson—the former CTO of Google sister company Waymo (before it was spun off from the search giant)—stated that “while [ATG’s] advances in software, hardware, product design, and more have flown under the radar, they have made tremendous headway on many fronts.” Urmson said that Uber ATG was “committed to rigorous testing and [has] built a strong safety culture. With their technical prowess in both research and practical applications, ATG will strengthen and accelerate the first Aurora Driver applications for heavy-duty trucks while allowing us to continue and accelerate our work on light-vehicle products.”