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Uber has abandoned efforts to develop self-driving cars in-house. Uber said today it is selling its self-driving unit, the Pittsburgh-based Advanced Technologies Group (ATG), to Aurora, an autonomous vehicle technology startup backed by Amazon and Sequoia Capital.
Uber is investing $400 million into Palo Alto, Calif.-based Aurora to take a 26% stake in the combined company. Aurora was valued at $2.5 billion after a $530 million investment in 2019. It said the Uber deal would raise its valuation to $10 billion.
Uber ATG will transfer its 1,200 employees to Aurora, which at present has 600 staff. Uber CEO Dara Khosrowshahi will take a board seat in the newly expanded Aurora. Uber ATG CEO Eric Meyhofer will not be joining the company and will be leaving Uber.
Founded in 2017, Aurora is building an autonomous vehicle stack both for driverless cars and trucks. It recently shifted its main focus to autonomous trucks, saying its first commercial autonomous vehicle will be in trucking.
The company was founded in part by Chris Urmson, who led the former Google self-driving car project that has since become Waymo. Urmson said Aurora is still pursuing other applications for autonomous vehicles, including robotaxis.
“Few technologies hold as much promise to improve people’s lives with safe, accessible, and environmentally friendly transportation as self-driving vehicles. For the last five years, our phenomenal team at ATG has been at the forefront of this effort – and in joining forces with Aurora, they are now in pole position to deliver on that promise even faster,” said Uber CEO Dara Khosrowshahi. “I’m looking forward to working with Chris, and to bringing the Aurora Driver to the Uber network in the years ahead.”
Uber’s tumultuous self-driving efforts
The deal with Aurora ends one of the more tumultuous efforts to develop fully autonomous vehicles. Uber’s efforts kicked into gear in June 2015 when it poached 40 researchers from Carnegie Mellon’s National Robotics Engineering Center. In 2016, Uber co-founder Travis Kalanick launched ATG and said the self-driving challenge is “basically existential for us.”
Then in 2016 Uber acquired autonomous trucking startup Otto for $680 million. The acquisition also landed Uber Otto’s co-founder Anthony Levandowski, who helped build Google’s first self-driving car. Levandowski was fired in 2017 as Waymo sued Uber for stealing trade secrets. The two companies settled the lawsuit in February 2018 for $250 million in equity. Two years after acquiring Otto, Uber in July 2018 shut down the project in a desperate attempt to salvage its self-driving car efforts.
That’s because a couple of months earlier, an Uber self-driving car struck and killed a woman in Tempe, Arizona. According to reports, Uber’s software and an inattentive human safety driver were the reasons behind the deadly crash. Uber’s self-driving cars were never highly regarded, but certainly there was no recovering from the fatal accident.
After all of this, the resulting autonomous vehicle technology reportedly didn’t work well. According to The Information, Uber’s self-driving car “couldn’t drive more than half a mile without encountering a problem.” And shortly before the fatal crash, one Uber staffer reportedly wrote an email that said “a car was damaged nearly every other day in February. We shouldn’t be hitting things every 15,000 miles.”
Cash drain on Uber’s business
In mid-2019, Uber ATG was valued at $7.25 billion ahead of Uber’s initial public offering. However, Uber reportedly spent nearly $3 billion over the years developing the technology.
In 2020, Uber ATG and “other technology programs” lost more than $300 million, according to the company’s financial filings. Offloading ATG is in-line with other moves made by Uber to move on from non-core business assets. For example, in May it offloaded its Jump bikes division to Lime as part of a $170 million investment in the scooter company. And Uber is reportedly in talks to sell off Elevate, its flying car project.
The COVID-19 pandemic has hammered Uber’s ride-hailing business. With people traveling less, Uber said its revenue fell 29 percent in the second quarter to $2.2 billion. This was its steepest decline since its IPO in May 2019 and resulted in a net loss of $1.8 billion.
Despite all of this, Uber still has a chip and a chair in the high-stakes game of autonomous vehicles. Which, at the end of the day, is all it’s ever needed. If robotaxis come to fruition in the coming years, Aurora could supply its driverless technology to the world’s largest ride-hailing fleet. Albeit an expensive one, Uber has finally come to the realization it doesn’t need to own the development of autonomous vehicle technology to reap the benefits.