Uber is selling off its autonomous vehicles development arm to Aurora Innovation as the ride-hailing company slims down amid a sharp decline in its business due to the coronavirus pandemic.
Aurora will acquire the employees and technology behind Uber’s Advanced Technologies Group in an equity transaction, the companies said Monday. Uber will invest $400 million into Aurora, and Uber’s CEO Dara Khosrowshahi will join Aurora’s board of directors, the companies said.
After the transaction, Aurora will be worth $10 billion and Uber will hold 26% stake in the company, said Chris Urmson, CEO of Aurora, in an interview.
“Our first product will be in trucking and freight, but we look forward to taking this great team that we have and accelerating that while continuing working on light vehicles and ride-haling, and we’ll ultimately see our vehicles deploying on the Uber network,” Urmson said.
Uber will not have exclusive rights as a ride-hailing company to Aurora’s technology, but the two companies will have a “preferred relationship,” Urmson said.
“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 Dara Khosrowshahi, Uber CEO, in a statement. “I’m looking forward to working with Chris, and to bringing the Aurora Driver to the Uber network in the years ahead.”
Uber will lose a critical piece of its company after the pandemic cut into its finances by suppressing demand for shared rides. Its path to profitability has often been linked with its plans to deploy autonomous vehicles and reduce the high cost of paying drivers.
Uber reported in November that its gross ride bookings between July and September fell to $14.7 billion, down 10% from a year ago. Revenue for the period declined 18%, and it lost $1.1 billion.
Fatal accident in Uber pilot
The company’s efforts around self-driving technology was marred in March 2018 when one of its automated test vehicles hit and killed a woman, the first death involving the technology. The backup Uber driver involved in the crash was charged with negligent homicide for being distracted in the moments before fatally striking the woman in suburban Phoenix.
“There’s no doubt they had a pretty rough couple of years a while back,” Urmson said. “What’s been impressive to me in meeting the team over the last little while is just how much the team has learned, and the tenaciousness, and determination of the team as they come to market in a thoughtful, safe way.”
Aurora, based in Mountain View, Calif., is led by former Google, Tesla and Uber executives. Aurora also has partnerships with delivery giant Amazon and auto companies Hyundai and Kia, among others, but its partnership with Uber is its first official relationship with a ride-hailing company.
The deal means Uber will be entrusting a key piece of its future to a 3-year-old startup co-founded and run by one of the engineers who launched Google’s pioneering work in self-driving cars more than a decade ago. Urmson was one of the most visible people involved in the once-secret project that
Google initially dubbed “Chauffeur” before it was finally spun off into a separate company called Waymo. Google and Waymo remain closely aligned under the same corporate parent, Alphabet.
Costly fight with Waymo
While at Google, Urmson also worked on the self-driving car technology with another top engineer, Anthony Levandowski, who defected to Uber in 2016 oversee its early efforts to build robotic vehicles.
As part of that effort, Uber bought Levandowski’s startup, Otto, for $680 million. That deal quickly disintegrated into a scandal after Waymo accused Levandowski of stealing its trade secrets and using them to help Uber to make the transition from human drivers to autonomous vehicles.
Uber denied the allegations, but eventually reached a $245 million settlement with Waymo in 2018 after a few days of testimony during a high-profile trial in San Francisco. Before the settlement, Uber’s former CEO and co-founder Travis Kalanick revealed he believed Google’s self-driving car technology posed an existential threat to Uber during his dramatic appearance on the witness stand.
That fear drove Kalanick Uber’s open its own self-driving car division stocked with robotic experts from Carnegie-Mellon University as former Google engineers acquired as part of the deal with Levandowski. Uber eventually fired Levandowski in 2017 and Levandowski wound up being sentenced to 18 months in prison earlier this year after pleading guilty to stealing some of Google’s trade secrets before he left the company in 2016.