Uber is reportedly in talks to sell its self-driving vehicle division to a startup run by former Uber, Tesla, and Google executives and backed by Amazon
- Uber is in talks to sell its self-driving vehicle division, ATG, to autonomous vehicle startup Aurora, TechCrunch reported Friday.
- ATG has been hobbled by a deadly crash, infighting, and unreliable tech — leading investors to lose patience and sparking rumors the company would try to offload the struggling unit.
- Despite a previous $7.25 billion valuation, ATG was facing an upcoming investment round that would have valued it at less than that, according to TechCrunch, as Uber has doubled down on its core ride-hailing and food delivery businesses during the pandemic.
- Aurora, a major player in the AV world, is headed up by former leaders of AV initiatives at Uber, Google, and Tesla.
Uber is looking to get rid of its self-driving vehicle division, Advanced Technologies Group (ATG), and AV startup Aurora Innovation is a likely candidate to acquire it, TechCrunch reported Friday.
Sources told TechCrunch that Uber "has been shopping" ATG to multiple potential buyers including some automakers, but that talks with Aurora, which began in October, are far along.
"We don't comment on rumor or speculation," an Aurora spokesperson told Business Insider, while Uber did not respond to a request for comment.
Despite ambitious goals, ATG has long struggled to make significant progress toward a fully-autonomous vehicle that can safely and efficiently move passengers and goods, while losing money along the way — leading to speculation in recent months that Uber would look to offload the struggling business unit.
According to TechCrunch, ATG was facing a possible "down round," where investors were considering dropping the division's valuation from its previous $7.25 billion valuation.
ATG's struggles
Uber launched ATG five years ago, and in its short life, the division has been plagued by multiple scandals and setbacks, bleeding money along the way — Uber reported $303 million in net losses for "ATG and other technologies" in its third quarter.
Employees told Business Insider's Julie Bort a deadly 2018 crash in Phoenix — the first AV incident to kill a pedestrian — exposed flaws in ATG's technology as well as poor decision-making and infighting. (Uber was found not criminally liable for the incident, while the human back-up driver was charged with negligent homicide).
The former head of Uber's self-driving division, Anthony Levandowski, was also at the center of a massive legal fight between Uber and Google's self-driving group, now called Waymo, over stolen technology. Uber fired Levandowski, who was recently sentenced to 18 months in prison for trade secret theft, in 2017 after he refused to testify in the case.
In September, The Information reported that an ATG manager sent an email to Uber CEO Dara Khosrowshahi warning him about shortcomings with the company's self-driving efforts, saying ATG "has simply failed to evolve and produce meaningful progress in so long that something has to be said before a disaster befalls us."
Restless investors
The scandals, infighting, and lack of technological progress have led investors to become impatient.
Bloomberg reported in September that two of Uber's biggest investors, SoftBank and Benchmark, have urged Khosrowshahi to rethink ATG's strategy and bring in more outside investment. ATG has received funding from Toyota and Denso in recent years.
Amid the COVID-19 pandemic, Uber has sold off several of its less successful side projects, such as e-bike startup Jump, as it refocuses on its core businesses of ride-hailing and food delivery.
Uber isn't the only company to struggle in self-driving. The AV industry more broadly has fallen far short of the optimistic expectations companies and analysts created during the 2010s. No automaker currently appears close to selling vehicles that can operate without human oversight, and only Waymo and Motional are giving rides to paying customers in self-driving vehicles, and even then, only in relatively small areas.
A wave of consolidation has also come for the industry recently, exacerbated by fundraising challenges during the pandemic.
Aurora is well-positioned
Aurora, which was started in 2016 by leading members of Uber's, Google's, and Tesla's autonomous-driving programs, is on an upward trajectory, however.
Several investors told Business Insider's Mark Matousek that Aurora has the most potential among self-driving startups due to its strong founding team, technology, and fundraising ability (the company is backed by major tech, automotive, and financial players including Amazon, Hyundai, and T. Rowe Price).
With only $765.6 million raised, however, Aurora is substantially smaller than ATG and would likely need to bring in outside investment or allow Uber to retain some equity in order to acquire it.
Mark Matousek and Julie Bort contributed reporting to this story.