Is Uber’s Sale of Autonomous Car Unit the End of Its Robo-Taxi Dream?

After weeks of speculation about a possible deal, Uber has sold its self-driving unit to autonomous tech developer Aurora Innovation. The deal comes after what some industry observers have seen as a gradual lowering of expectations about the promise of fully autonomous robo-taxis, which Uber’s Advanced Technologies Group, launched just in 2015, had been working on in what was seen as an space race of sorts among tech giants with a winner-takes-all mentality.

However, Uber isn’t letting go of the self-driving dream entirely, at least not officially. The ride-hailing giant will actually invest some $400 million into the Aurora, with Uber CEO Dara Khosrowshahi joining Aurora’s board as well.

Despite Uber’s repeated indications that it is not giving up on self-driving tech, the deal is still seen as an effort to minimize the costs of development now that it has become increasingly clear that Level 5 autonomous vehicles are still many years away from safe deployment on any sort of mass scale, especially a scale with a potential to make a profit for those who own the vehicles. This last part is now seen as particularly elusive, due to the high costs of building and fielding autonomous taxis with all of their sensors and processing hardware, all with the aim of replacing gig economy human drivers.

Uber has had issues making a profit, to put it mildly, even with human drivers behind the wheel driving their own cars, posting a net loss of $8.5 billion in 2019. And there is now greater skepticism in the industry about just how much a functioning Level 4 car could cost if deployed on a geo-fenced route, assuming the Level 4 tech worked on an acceptable safety level and there was a regulatory green light. At the current level of tech there is a general view in the industry that it’s certainly possible to field Level 4 robo-taxis in some limited areas at the moment, and there are ongoing experiments doing just that in the U.S. and in other countries. But consistently generating profit by driving paying passengers around in another challenge altogether.

Uber’s sale of ATG comes days after rumors of a deal in the works to sell its Uber Elevate flying taxi unit, also in development stages, to flying car developer Joby Aviation.

What’s really behind the sale of ATG, some industry observers believe, is an effort to cut off money-draining units at a difficult time for the ride-hailing industry, battered by the pressures of the pandemic and a much longer-standing problem of consistent profitability even prior to the pandemic. Both the autonomous driving unit and the flying taxi unit represent significant costs for Uber, which its CEO wants to see become consistently profitable.

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