The company is selling its self-driving division to start-up Aurora in a deal that values the ride-hailing giant’s autonomous vehicle unit at about $4 billion, according to the companies and people familiar with the matter. Uber executives have long pointed toward a future in which the company could automate its fleet, removing a huge portion of the costs that help prevent it from attaining profitability.
The sale represents the final chapter for an ambitious but troubled division that was left reeling after one of its vehicles was investigated in the first known pedestrian death involving a self-driving vehicle.
Uber has been the dominant player in the ride-hailing industry over the past decade, but the pandemic has strained its business and forced it to rely more on food delivery while cutting back on longer-term investments and experimental projects.
Faiz Siddiqui
Hardly surprising, considering how little progress Uber was making in the area and the broader context of the pandemic and economic recession. After cost cuts and several rounds of layoffs, and the realization that the home delivery business may be more lucrative for the near future, a speculative line of business with little prospect of success over the next five years at least was bound to be the next to go. In case anyone remembers, in early 2017 Uber also started a flying car initiative, Uber Elevate, which Uber is now selling to Joby Aviation.
Leaving the extraordinary circumstances of 2020 aside, self-driving never really felt like a good fit for Uber. To phrase it more clearly, autonomous cars would be a major boost to Uber’s business, but the company did not have the engineering and software skills to deliver such a massive project to its completion – it’s one thing to write a popular iPhone app, and quite another to develop a full-blown AI that can operate independently in unforeseen circumstances. The reverse can be said of Google, who is probably most advanced on the road to self-driving cars: it is not a project that fits Google’s business model, but matches well with their big data and AI focus. On top of that, as a massively profitable near-monopoly on the ad market, Google can afford these side-projects with potential long term payoffs – Uber cannot.
While Uber was private, the project served as a convenient distraction for private investors: a promise of a bright future that need not come too soon, and the supposed corner stone of Uber’s plans to become the Amazon of transportation. But as public company, the stock market is less forgiving and demands clear and timely results.
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