The writing has been on the wall for Uber’s autonomous vehicle unit ever since The Information ran a story on September 28 about the complete lack of tangible progress so far. Anyone who read that story knew before they finished that Uber would have to do something about the cash-burning autonomy unit sooner than later –– the question was just what. Well now we have an answer: they’re trying to sell it.
So what’s the big deal? Once the hottest startup in Silicon Valley, Uber has yet to turn a profit despite going public in May 2019. Because of the contractor model Uber has been fighting so hard to protect, most of the drivers who actually run Uber’s service are probably losing money and don’t realize it once you factor in things like income tax (which Uber doesn’t withhold), maintenance, depreciation, tires, insurance, gasoline, car washes, etc. The math on this is not always so obvious at first to workers. But even though Uber drivers have razor-thin or sometimes negative margins, the company is still losing billions of dollars a year on top of the driver’s expenses! Some might say their entire business model is structurally unprofitable and only the consumer benefits from cheap investor funded cab rides.
Given all this, Uber really needed their autonomy strategy to pan out. As recently as January, CNBC ran a story saying that Uber’s self-driving cars were the key to achieving profitability. Uh oh.
So let’s check in on our friends in Pittsburgh. How are they doing?
Uber Technologies Inc is in talks to sell its autonomous driving unit, Uber Advanced Technologies Group (ATG), to self-driving car startup Aurora, a source familiar with the matter told Reuters.Reuters
Hey Aurora, remember that company that ran over and killed a pedestrian with its self-driving car because the safety driver was watching The Voice on Hulu? Well good news –– for the right price, you could own it! Please take this turd off our hands.
The talks are still ongoing and there is no certainty a deal could be reached, the source said, adding that Uber is also considering taking stake in the new company if Aurora takes over ATG.Reuters
Considering taking a stake?!? No way Dara, flush that turd. It’s time for Uber to wash their hands of this. This project is a dead end.
Uber’s ATG, which works to develop autonomous driving technology, counts Toyota Motor Corp 7203.T and SoftBank Group Corp 9984.T among its investors. Earlier last year, the unit had raised $1 billion (758 million pounds) from a consortium of investors including SoftBank, that valued it at $7.25 billion.Reuters
Having Softbank as an investor is usually a bad sign when you’re trying to figure out if your last round took place at a fair valuation. According to my expert analysis, Uber ATG is worth about 7.25 doll hairs today.
Uber and Aurora declined to comment. TechCrunch was the first to report about this deal.
Aurora is among dozens of startups, automakers and large technology companies working on self-driving car systems, eager to capitalize on a sea change in the transportation industry.Reuters
I call them the autonomorons. Not in the top 5, just one of the dozens of other companies hopelessly promising autonomous cars.
Aurora was started by Chris Urmson and some ex-Waymo people who are really great. But if they buy Uber’s turd of a self-driving project, I seriously question their judgment. It should be clear to everyone by now that the spatial approach to autonomy is destined for failure.
Best of luck to Uber in trying to offload this turd of an autonomy project on a willing buyer!