Eighteen months ago, Uber’s self-driving car unit, Uber Advanced Technologies Group, was valued at $7.25 billion following a $1 billion investment from Toyota, DENSO and Softbank’s Vision Fund. Now, it’s up for sale and a competing autonomous vehicle technology startup is in talks with Uber to buy it, according to three sources familiar with the deal.
Aurora Innovation, the startup founded by three veterans of the autonomous vehicle industry who led programs at Google, Tesla and Uber, is in negotiations to buy Uber ATG. Terms of the deal are still unknown, but sources say the two companies have been in talks since October and it is far along in the process.
An Uber spokesperson declined to comment, citing that the company’s general policy is not to comment on these sorts of inquiries. An Aurora spokesperson said it doesn’t comment on speculation.
The talks could falter. But if successful, they have the potential to triple Aurora’s headcount and allow Uber to unload an expensive long-term play that has sustained several controversies in its short life.
Uber has ‘been shopping’
Shedding Uber ATG would follow a string of spin offs or other deals in recent months that has narrowed Uber’s focus and costs into core areas of ride-hailing and delivery. Two years ago, Uber’s business model could be described as an “all of the above approach,” a bet on generating revenue from all forms of transportation, including ride-hailing, micromobility, logistics, package and food delivery and someday even autonomous robotaxis.
That strategy has changed since Uber went public and has further accelerated as the COVID-19 pandemic has upended the economy and fundamentally changed how people live. In the past 11 months, Uber has dumped shared micromobility unit Jump, sold a stake in its growing but still unprofitable logistics arm, Uber Freight and acquired Postmates. (The Postmates acquisition is expected to close in the fourth quarter of 2020).
Uber ATG has been the company’s last big, expensive holding. Uber ATG holds a lot of long-term promise and high present-day costs; Uber reported in November that ATG and “other technologies” (which includes Uber Elevate) had a net loss of $303 million in the nine months that ended September 30, 2020. In its S-1 document, Uber said it incurred $457 million of research and development expenses for its ATG and “other Technology Programs” initiatives.
Four sources within the industry told TechCrunch that Uber “has been shopping” ATG to several companies, including automakers this year. Sources have also told TechCrunch that Uber ATG was facing a potential down round, which might have been an additional motivator behind the talks with Aurora.
Aurora, which was founded in 2017, is focused on building the full self-driving stack, the underlying technology that will allow vehicles to navigate highways and city streets without a human driver behind the wheel. Aurora has attracted attention and investment from high-profile venture firms, management firms and corporations such as Greylock Partners, Sequoia Capital, Amazon and T. Rowe Price, in part because of its founders Sterling Anderson, Drew Bagnell and Chris Urmson.
Urmson led the former Google self-driving project before it spun out to become the Alphabet business Waymo. Anderson is best known for leading the development and launch of the Tesla Model X and the automaker’s Autopilot program. Bagnell, an associate professor at Carnegie Mellon, helped launch Uber’s efforts in autonomy, ultimately heading the autonomy and perception team at the Advanced Technologies Center in Pittsburgh.
Aurora has grown from a small upstart to a company with 600 employees and operations in the San Francisco Bay Area, Pittsburgh, Texas and Bozeman, Montana, home of Blackmore, the lidar company it acquired in 2019. About 12% of Aurora’s current workforce previously worked at Uber, according to records on LinkedIn.