Uber (NYSE: UBER) is handing over its troubled self-driving vehicle unit to Amazon-backed Aurora as the tech giant continues to unload unprofitable business divisions and the industry moves away from robotaxis to autonomous trucking and food delivery.
As part of the equity deal, Uber will invest $400 million in Aurora and get a 26% stake in the company, an Aurora spokesperson told FreightWaves. Uber CEO Dara Khosrowshahi is joining the board.
The acquisition and Uber’s new investment brings Aurora’s value to $10 billion.
While the Uber unit focused on passenger vehicles, Aurora will prioritize self-driving truck operations, Aurora CEO Chris Urmson said in a Monday blog post announcing the news.
Reiterating that statement, the spokesperson said in an email that “we believe delivering the Aurora Driver in trucks will come first.” But Aurora will continue to work on passenger applications, according to the spokesperson, and will work with Uber to launch and commercialize self-driving vehicles on Uber’s ride-sharing network “in the years to come.”
End to troubled chapter
The sale marks a humbling and expensive move for Uber, which shelled out $2.5 billion as it struggled to blaze a trail in autonomous vehicles.
The company’s purchase of Otto Trucking led to an intellectual property lawsuit with Google.
One of Uber’s test vehicles also struck and killed a pedestrian in Arizona in 2018, forcing the company to temporarily suspend operations and completely overhaul operations.
Adding to the company’s woes were reports suggesting Uber’s technology prowess was lacking compared to competitors, Josh Kern, an analyst with Lux Research, told FreightWaves. The Aurora sale/equity deal, he added, allows Uber to “decouple from the self-driving business but still have a stake in it.”
Once the deal closes, a majority of Uber ATG (the self-driving division) employees will move to Aurora, the spokesperson said.
Uber tightens its belt
The Aurora deal comes as Khosrowshahi goes on a selling spree, offloading Uber’s money-losing business divisions in an effort to make the company profitable.
Included in a flurry of Uber dealmaking over the past year is its acquisition of Latin American grocery delivery firm Cornershop and food delivery firm Postmates — and the sale of its Jump bike and scooter-rental business.
In that context, the sale of Uber ATG is part of a broader industry shift away from passenger vehicles and toward delivery and long-haul trucking.
Autonomous trucking gets another contender
Founded in 2016, Aurora is part of that trajectory, with the company saying last spring that it would prioritize the development of semi-trailer trucks over that of cars, its original focus.
Aurora is late to the trucking game, as other startups have “a big head start,” Richard Bishop, a leading expert on autonomous trucking, told FreightWaves.
Nevertheless, the company was already bringing “significant expertise to the game,” Bishop said in an email, and now, with the Uber acquisition, “they can benefit from a new infusion of highly seasoned talent, plus Uber’s cash.”
The future of AV trucking will be one in which multiple automated driving vendors can compete, Bishop added. So “there’s room for Aurora.”
Aurora is currently testing its autonomous Class 8 trucks from Peterbilt Motors and Chrysler Pacifica minivans in Texas, the San Francisco Bay area and Pittsburgh.
Uber Elevate grounded
In another sign of belt tightening, Uber is reportedly selling its flying taxi unit, Uber Elevate, to Joby Aviation, a startup working on small vertical-takeoff-and-landing (VTOL) technology.
Uber was one of several technology companies to announce interest in electric autonomous air travel several years ago, and a model of its futuristic flying machine has been one of the star attractions at the Consumer Electronics Show over the past two years.
Joby and Uber did not immediately return FreightWaves’ requests for comment.