News, analysis and comment from the Financial Times, the worldʼs leading global business publication
Uber has abandoned efforts to develop its own self-driving car and will instead swap its operations for a minority stake in Aurora, a driverless vehicle start-up backed by Amazon and Sequoia, at a significantly marked-down valuation.
The deal brings to an end one of the most ambitious attempts to develop a fully autonomous vehicle, in which Uber leapfrogged its rivals in pursuit of getting a fleet of self-driving taxis on the road.
However, its efforts were marred by tragedy when a woman was killed in an accident involving one of the cars in Tempe, Arizona, in 2018, and Uber’s investors have pressed the company to focus on getting its core car-booking business to profitability.
Uber’s self-driving business was a significant cash drain for the company, but was valued at $7.25bn as recently as April 2019, when Toyota and SoftBank took minority stakes in the unit ahead of the group’s initial public offering.
Eric Meyhofer, the head of the self-driving unit, will not be joining Aurora and will leave Uber.
Aurora — founded by a trio of executives who played key roles founding the self-driving programmes at Google, Tesla and Uber — is known for its strong financial backing. But its strategy of working closely with top carmakers has faltered, as early partners Volkswagen, Hyundai and Fiat Chrysler all switched to backing technology from Aurora’s rivals.
In 2016, after Travis Kalanick launched the division, the Uber co-founder called the self-driving challenge “basically existential for us”. The fear was that Google could undermine its entire business with a cheaper, safer ride-hailing business.
Uber acted quickly and in 2016 invested $680m in driverless start-up Otto. It projected it would have 75,000 autonomous vehicles on roads by 2019.
But its early hopes faded and the unit instead became a public-relations nightmare after the accident in Tempe. This year the self-driving unit and “other technology programs” lost more than $300m on an adjusted ebitda basis.
I find this quite shocking given Uber's entire vision was based on using expensive cash-burning human drivers as a bridge until autonomous vehicles were ready, ushering in Uber's global domination of the transport industry.