Uber sells its self-driving technology arm to Aurora

The deal is set to push Aurora’s valuation to $10bn

Uber has abandoned the costly development of self-driving car technology and sold Uber Advanced Technologies Group to Aurora, the autonomous vehicle startup backed by Sequoia Capital and Amazon.

Aurora is not paying cash for Uber ATG, a company that was valued at $7.25bn following a $1bn investment last year from Toyota, DENSO and SoftBank’s Vision Fund. Instead, Uber is handing over its equity in ATG and investing $400m into Aurora, which will give it a 26% stake in the combined company, according to a filing with the US Securities and Exchange Commission. (As a refresher, Uber held an 86.2% stake in Uber ATG, according to filings with the SEC. Uber ATG’s investors held a combined stake of 13.8% in the company.)

Furthermore, shareholders in Uber ATG will now become minority shareholders of Aurora. Notably, once the deal closes, Uber together with existing ATG investors and the ATG employees who continue their employment with Aurora are expected to collectively hold about 40% interest in Aurora on a fully diluted basis.

"We're excited to announce the most transformative deal in the AV industry: we're acquiring Uber ATG. Together, we'll accelerate our mission to deliver the benefits of self-driving technology safely, quickly, and broadly," Aurora said on Twitter.

Uber's co-founder Travis Kalanick had pushed the development of its own technology for autonomous driving as chief executive. Kalanick brought Anthony Levandowski, a prominent developer from Google's robot car project, onboard as project manager.

The company then sued Uber, accusing Levandowski of having stolen confidential information. After a long legal battle, Levandowski was fired and Uber had to commit not to use any Google technology.

Uber's self-driving car was responsible for the only fatal accident involving a robot car to date.

In March 2018, during a night-time test drive in Tempe, Arizona, one of Uber's vehicles hit a woman who was wheeling a bicycle and crossing the multi-lane road. According to accident investigators' findings, Uber's software was initially unable to classify what it saw.

Uber's boss Dara Khosrowshahi, who has been in charge since August 2017, had taken various cost-cutting measures but had so far spared the development of robot car technology. However, the coronavirus pandemic hit the company hard, and in the latest quarter, it lost $1.1bn and sales fell by 18%.

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