Uber confirms the sale of the AV arm to Aurora Innovation

UPDATED December 8, 2020: In filings filed Monday with the Securities and Exchange Commission (SEC), Uber confirmed that the Advanced Technologies Group (ATG) business unit will be sold to Aurora Innovation.

Under the deal, which is expected to close early next year, Uber will invest $ 400 million in Aurora for a roughly 26% stake. When the deal is closed, the companies will “work together to introduce and commercialize self-driving vehicles on the company’s ridesharing network,” said Uber in its 8K form.

ATG’s 1,200 employees will also be taken over by Aurora, according to Wirora reports, tripling the workforce and increasing the company’s valuation to $ 10 billion.

Diving letter:

  • Uber is close to selling its autonomous vehicle (AV) business, Uber Advanced Technologies Group (ATG), to Aurora Innovation for an undisclosed amount. This is evident from TechCrunch reports that cite anonymous sources. Both Uber and Aurora Innovation declined to comment on the reports.
  • ATG was valued at $ 7.25 billion last July after a major investment by Toyota, SoftBank, and others, but has struggled to stay afloat as Uber looks for a way to get around by divesting or splitting some of its Assets to achieve profitability.
  • According to TechCrunch, Uber has been in talks with Aurora Innovation about the acquisition since October. TechCrunch reports that the hailfighter ATG “shopped” at various companies, including automakers. Founded in 2017, Aurora Innovation has focused on developing the technology that supports AVs and helps them navigate without human drivers.

Dive Insight:

Uber’s ATG arm has weathered several controversies in some difficult years. An Uber-owned AV struck and killed a pedestrian in Tempe, AZ two years ago. This led the National Transportation Safety Board (NTSB) to say the company has “an inadequate safety culture.” It has also been the subject of legal proceedings, with rival Waymo alleging some of its former employees stole trade secrets and infringed patents while working for ATG.

In its S-1 filing, which was filed with the Securities and Exchange Commission (SEC) for its IPO in 2019, Uber said it had spent $ 457 million on research and development for ATG and other programs by that time In the meantime, various projects have been sold or outsourced to generate a profit. In the past 12 months, Uber sold its Jump micro-mobility platform, sold a $ 500 million stake in its Uber Freight logistics platform, and bought Postmates grocery delivery service for $ 2.5 billion.

Profitability concerns only got worse during the coronavirus pandemic (COVID-19). In Uber’s third quarter earnings call earlier this month, CEO Dara Khosrowshahi said he remains focused on “improving the overall health of a company by raising more than $ 1 billion in fixed costs, strengthening our bottom line, and that Capital stricter with a focus on our core segments. “

In fact, CFO Nelson Chai noted that ATG and other technology programs posted loss before interest, taxes, depreciation, and amortization (EBITDA) of $ 104 million for the quarter, even as test vehicles returned to the streets of Washington, DC and Pittsburgh . Such a loss means the company continues to put money into its ATG program but doesn’t see much in terms of the return on its investment or its cash flow.

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