Uber Technologies is selling its autonomous driving unit, Uber Advanced Technologies Group (ATG), to self-driving car startup Aurora, media reports said.
The equity deal valued the ATG at US$4bn, according to Reuters' sources. The news agency noted this was a major drop in valuation for ATG, as it raised $1bn from a consortium of investors including Toyota and SoftBank at a valuation of $7.25bn in 2019.
Reuters sources added Uber was also investing $400m in Aurora, which values Aurora at $10bn. Uber wou;d hold about 26% ownership interest in Aurora on a fully diluted basis, the company said in a filing cited by the news agency.
Aurora will collaborate with Uber to launch self driving vehicles on its ride hailing and food delivery network. Uber is also working on building out its freight logistics platform but is not operating its own trucks at present, the report said.
The sale would accelerate Uber's goal to achieve profitability on an adjusted basis by the end of 2021, CEO Dara Khosrowshahi told Reuters. "This essentially advances our path to profitability," he said.
Khosrowshahi, who will take a seat on the Aurora board, told the news agency Uber profitability was not the leading factor in the deal.
Uber had been seeking options for its autonomous vehicle division, a cash burning machine, including more outside investment, as Khosrowshahi refocused on core businesses including ride hailing and food delivery since the COVID-19 pandemic hit.
Aurora, a Palo Alto, California based startup, is already testing vehicles in the San Francisco Bay Area and Pittsburgh and said in July it was expanding testing and development of its vehicles to the Dallas-Fort Worth area of Texas, Reuters noted.
Uber's partnership with Aurora is not exclusive. Khosrowshahi told the news agency Uber would continue to install self driving technology on a variety of vehicle makes, but called the relationship with Aurora "special".
"If the technology becomes real, I think our investment will be money good and then some," he told Reuters.