Uber announced on Monday that its autonomous driving unit known as ATG, will be acquired by Aurora Innovation Inc., a startup company that will gain extra capital from Uber as part of the deal. The appeal to Uber is that it takes driverless cars off the Uber balance sheet. Uber owned approximately 86% of ATG at the end of September with small stakes in Toyota and its supplier Denso. After this new deal, Uber will own about 26% of ATG.
The acquisition means that Uber will not need to consolidate the expense of developing driverless cars. The deal also helps to alleviate Uber of liability surrounding the Waymo scandal, where Waymo sued Uber for stealing trade secrets, followed by a pedestrian accident with an Uber test vehicle.
Having larger partners is important as driverless cars need to be integrated with technology. The deal will also give Aurora a $10 billion valuation, sitting shortly behind Waymo and General Motors. This and the postdeal shareholdings imply a valuation of $4 billion for ATG—markedly down from its previous valuation—and $6 billion for the original Aurora business, which was valued at just $2.5 billion early last year.
To live up to its $10 billion price tag, Aurora will come up with a credible plan a manufacturing a safe driverless vehicle to roll out in scale. A complex merger-integration process may not make the challenge easier. Aurora has roughly 600 staff, compared with ATG’s 1,200, but Aurora boss Chris Urmson will lead the combined company.
Aurora also secured a small investment from Amazon just last year and has discussed applying its technology to the freight business.