Uber’s self-driving unit, Advanced Technologies Group (ATG), is being sold off. The division will be acquired by start-up competitor Aurora Innovation.
The deal, expected to close in the first quarter of 2021, values ATG at $4 billion. The unit was valued at $7.25 billion in April 2019 when Softbank, Denso, and Toyota took a stake in ATG. Uber CEO Dara Khosrowshahi will join the company’s board of directors as part of the deal. The ride-sharing giant will also invest $400 million into the company.
Overall, Uber, ATG investors, and employees are expected to own a 40% stake in Aurora, according to a regulatory filing accompanying the deal. Uber itself will hold a 26% stake.
Aurora is backed by Hyundai, Amazon and major venture firms such as Greylock and Sequoia. Media reports first emerged in November that the two companies were in talks for ATG. Uber’s co-founder and former CEO Travis Kalanick had viewed self-driving cars as an essential investment. He said back in 2016 that he believed the world would shift to autonomous vehicles eventually.
However, the ATG self-driving vehicle unit brought high costs and safety challenges to Uber. Throughout 2020, Uber has made efforts to stem losses across all of its business ventures. That included major layoffs in the spring, while still growing its delivery business. The sale of ATG is another attempt to cut costs.
Uber has tested self-driving cars in several cities. However, they are still quite far from having autonomous vehicles roaming the streets as robo-taxis. There are also reports that Uber wants to sell of its experimental “air taxi” business.