Uber is giving up on an effort it has invested 5 years and over $1 billion into. The company, which was developing its own self-driving technology through its subsidiary Advanced Technologies Group (ATG), is now selling this unit to Aurora Technologies, an Amazon-backed startup that develops sensors and software for autonomous vehicles.
“By adding the people and technology of Uber’s Advanced Technologies Group to the incredible group we’ve already assembled at Aurora, we’re shifting the landscape of the automated vehicle space,” said Chris Urmson, co-founder and CEO of Aurora. “With the addition of ATG, Aurora will have an incredibly strong team and technology, a clear path to several markets, and the resources to deliver.”
The deal is valued at $4 billion, which Reuters said is “disappointing” given that the company was worth $7.25 billion last year . However, Uber is not completely bailing out on its self-driving dream, as the ride-hailing company will be investing $400 million into Aurora, giving it a 26% stake. Uber CEO Dara Khosrowshahi is also joining the startup’s Board.
“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 Khosrowshahi.
Still, the selling of a unit Uber had high hopes for in the past indicates that the company is most likely shifting to a lower gear.
“When [Uber] went public in 2019, its ambitions spanned autonomous vehicles, bike-sharing, food delivery, freight and other markets,” Reuters said. “Now Chief Executive Dara Khosrowshahi is selling its self-driving unit for a stake in autonomous startup Aurora – a sign that its ambitions are shrinking.”
Uber has never made a profit since it was first founded in 2009, and this latest move most likely indicates the company is trying to refocus its efforts on the ventures with the best returns. According to Investopedia, the company’s delivery business produces the highest revenues, while its ride-hailing arm is the most profitable. For years, the company has struggled to find the right balance that will finally bring it out of the red, and this latest sale is just one of many steps it is seemingly taking.
“Developing driverless technology was a key priority when Uber’s founder and former chief executive Travis Kalanick was leading the ride hailing firm, since he saw it as a way to reduce costs,” the BBC said. “But the programme hit setbacks after one of its cars was involved in a deadly crash in Arizona, though officials blamed human error for the accident and declined to bring criminal charges against the company.”
The BBC also said that ATG was “tangled up in legal fights over allegations of technology theft,” so the division was seemingly more of a fuss than it was worth. It was also making a loss, like most of Uber’s other ventures, so this move makes sense at this time.