Uber Technologies Inc. (NYSE:UBER) Offloads Self-Driving Car’s Unit Amid Rising Costs Concerns
Faced with rising costs and safety challenges, Uber Technologies Inc. (NYSE: UBER) has decided to offload its self-driving unit, Advanced Technologies Group. Aurora Innovation is acquiring the unit in a deal that values it close to $4 billion. The deal should close in the first quarter of next year.
Under the terms of the agreement Uber CEO, Dare Khosrowshahi is to join the Aurora Innovation board. Similarly, Uber is to invest $400 million in the combined company. Conversely, Uber, ATG investors, and employees are to own 40% of the combined company.
In acquiring Advanced Technologies, Aurora Innovation CEO says the unit will help position the company to deliver self-driving products highly needed to transform transportation and logistics. Backed by the likes of Hyundai Amazon and venture firms Greylock and Sequoia, the company looks set to strengthen its ambitions on this front.
For Uber, the sell-off comes as a surprise as co-founder Travis Kalanick had insisted on the need to focus on self-driving cars as the world slowly shifts to autonomous vehicles. However, the sell-off was inevitable as the unit brought in high costs at a time when the ride sharing company was struggling amid the pandemic.
Developing self-driving cars has always been a key priority for Uber’s founder. However, the program has hit setbacks along the way. One of the company’s vehicles undergoing trials was involved in a deadly clash.
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In addition, Uber has incurred significant losses in the ride-hailing business as the pandemic took a toll on its revenue streams. The company has had to embark on cost-cutting, which have resulted in significant layoffs.
It has also had to focus on growing the delivery business in response to the growing e-commerce spectacle. Increased focus on delivery business stems from the ride-sharing business stalling as people refrain from traveling owing to COVID-19 concerns.
In addition to divesting the self-driving unit, Uber has also transferred its electric bike-sharing subsidiary, Jump, to Lime. the divestment is part of the long term plan to focus on the taxi business and the food delivery services.