Uber Sells its Autonomous Driving Unit to Aurora for $4 Billion

author: Eric Walz   

A self-driving Volvo XC90 SUV developed by Uber ATG on the streets of San Francisco in 2016.

In 2016, ride-hailing giant Uber Technologies Inc. started to develop self-driving vehicles in earnest. The company's former CEO and co-founder Travis Kalanick believed that adding autonomous vehicles for its ride-hailing network would secure its future, so Uber formed a new internal division called Advanced Technologies Group (ATG) and tasked it with developing self-driving vehicles for the company's ride-hailing network.

However, with little experience in the space, Uber's efforts to develop the technology proved difficult, especially when its was competing against industry leaders like Waymo, a company that started working on the technology way back in 2009 as part of Google's first self-driving car project. 

Now Uber is abandoning its internal efforts to develop self-driving vehicles on its own and is selling off its Advanced Technologies Group (ATG) division and assets to California startup Aurora for $4 billion. As part of the deal, Uber will transfer its entire 1,200-employee ATG unit to Aurora, which at present has around 600 employees. Uber will also invest $400 million in Aurora.

Uber itself will retain a 26% stake in Aurora and Uber's Chief Executive Dara Khosrowshahi will take a seat on Aurora's board. Eric Meyhofer, the current head of Uber's self-driving unit, will not be joining Aurora and will leave Uber, the companies said. 

About Aurora

Aurora was founded in 2017 by three Silicon Valley veterans who previously worked at Google, Tesla and Uber. Aurora CEO and co-founder Chris Urmson was a pioneer in developing Google's first self-driving cars and led Google's early self-driving car program, which has now become Waymo.

Aurora's other two co-founders are Sterling Anderson, who serves as Aurora's chief product officer, and CTO Drew Bagnell, who was a founding member of Uber ATG in Pittsburgh. 

Anderson previously worked for Elon Musk at Tesla and led the team that developed Tesla's "Autopilot" autonomous driving technology. Prior to that, he led the design, development, and launch of the Tesla Model X.

Rather than building a self-driving car, Aurora is developing a complete suite of self-driving software and hardware that can be sold to other automakers or added to a production vehicle platform. The platform is called the "Aurora Driver" and includes a standard set of autonomous driving hardware and software. 

Aurora's software employs machine learning and will be able to learn from the combined experience of all vehicles on the platform and improve over time as more autonomous miles are driven. Aurora was planning to develop an entire ecosystem around its platform, which now might include ride-hailing from Uber.

Aurora was valued at $2.5 billion after a $530 million investment in Feb 2019 led by ecommerce giant Amazon and Sequoia. The deal with Uber raises the company's valuation to $10 billion. 

"By adding the people and technology of Uber's Advanced Technologies Group to the incredible group we've already assembled at Aurora, we're shifting the landscape of the automated vehicle space," said Chris Urmson, co-founder and CEO of Aurora. "With the addition of ATG, Aurora will have an incredibly strong team and technology, a clear path to several markets, and the resources to deliver." 

A self-driving minvan built by Aurora.

Uber launched its Advanced Technologies Group in 2016 and set up its headquarters in Pittsburgh. Former Uber CEO and co-founder Kalanick imagined a future where tens of thousands of self-driving Uber vehicles would be picking up passengers in cities around the world. 

He believed that Uber could attain sustained profitability by not having to pay drivers a significant portion of each fare, as its does now. The former Uber CEO called the self-driving challenge for the company "basically existential for us."

With little experience in the development of self-driving vehicles, Uber used its cash to poach dozens of robotics engineers and computer scientists from nearby Carnegie Mellon University to jumpstart its efforts. The university is considered to be one of the top robotics schools in the country.

However Uber's big self-driving plans with its ATG unit never materialized. The business unit was burning through significant cash with little to show for it. Uber ATG was reportedly burning roughly $20 million per month in its rush to catch up with its competitors, including Waymo, Lyft, and General Motors' Cruise division. There were also reports of infighting between teams at ATG, which further stalled the division's progress on autonomous driving. 

Then in March 2018, an Uber autonomous test vehicle struck and killed a pedestrian in Arizona resulting in Uber suspended its ATG operations for a top to bottom review of safety. The incident was the first known fatality involving a self-driving vehicle and put Uber even further behind rivals Waymo and General Motors' autonomous driving division Cruise.

Still, Uber ATG was valued at over $7 billion in 2019, when Japan's Toyota Motor Co and SoftBank took minority stakes in the unit ahead of Uber's initial public offering. 

Now Uber ATG will help accelerate the launch of the first Aurora Driver applications for heavy-duty trucks while allowing Aurora to continue and accelerate work on light-vehicle products.

"Few technologies hold as much promise to improve people's lives with safe, accessible, and environmentally friendly transportation as self-driving vehicles. For the last five years, our phenomenal team at ATG has been at the forefront of this effort—and in joining forces with Aurora, they are now in pole position to deliver on that promise even faster," said Dara Khosrowshahi, CEO of Uber. "I'm looking forward to working with Chris, and to bringing the Aurora Driver to the Uber network in the years ahead."

Now that Aurora has acquired Uber ATG, the startup may eventually supply its driverless technology to Uber, which operates the world's largest ride-hailing fleet. Toyota's involvement with Uber ATG could also lead to Aurora supplying its technology to the automaker.

Uber once projected it would have 75,000 self-driving vehicles on roads by 2019. Although that didn't happen as planned, the Aurora acquisition may help the ride-hailing company to realize its goal.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.