SAN FRANCISCO — Uber’s autonomous vehicle unit is receiving a new investment, the company said late Thursday, just days before it begins pitching its business to public investors.
SoftBank, Toyota and the Japanese automaker Denso will put $1 billion toward Uber’s effort to develop autonomous cars. As Uber marches toward an I.P.O., the deal will help shield the company from tough questions about how the money-losing endeavor is harming its profit prospects.
The self-driving unit, known as the Autonomous Technology Group, or A.T.G., will be restructured as part of the deal, allowing for a targeted investment rather than a broad investment in Uber, a ride-hailing giant with a number of smaller businesses. The self-driving group will answer to its own corporate board, made up of representatives from Uber, SoftBank and Toyota, with Uber maintaining majority control.
The deal values this unit at $7.25 billion, the company said. Toyota and Denso’s investment totals $667 million, while SoftBank’s is $333 million.
“The development of automated driving technology will transform transportation as we know it, making our streets safer and our cities more livable,” Uber’s chief executive, Dara Khosrowshahi, said in a statement. The investment will help Uber remain at the forefront of that shift, he added.
Uber spent $457 million in 2018 on research and development efforts for self-driving cars, a sum that could make public investors nervous.
“While we believe that autonomous vehicles present substantial opportunities, the development of such technology is expensive and time-consuming and may not be successful,” Uber warned potential investors in a public prospectus filed last week.
Uber is already deeply unprofitable — it lost $1.8 billion last year — and its heavy spending on self-driving cars will make it harder for the company to reach profitability. But in its prospectus, the company argued that once its autonomous cars were road ready, they would reduce the amount Uber spent on drivers and earn the company money.
Uber’s effort to build self-driving cars has encountered many hurdles since it began in 2015. A bruising trade-secrets lawsuit brought by a competitor ended when Uber agreed to pay $245 million in equity and allow inspections of its technology. (According to Uber’s prospectus, one such recent inspection turned up “problematic” functions in Uber’s software.)
Shortly after the settlement, one of Uber’s self-driving cars struck and killed a pedestrian in Tempe, Ariz. The fatal crash increased skepticism from top Uber executives about the project, and put the autonomous unit in a precarious position.
“The team at Uber A.T.G. has made significant progress developing highly robust automated ride-sharing technology,” Rajeev Misra, the chief executive of SoftBank’s Vision Fund, said in a statement. “With a comprehensive platform of hardware and software, the largest global ride-sharing network and Toyota’s partnership, this collaboration is well positioned to deploy automated ride-sharing services at scale.”
Uber is expected to begin courting public investors in the coming weeks and will make its debut on the public market next month. The company’s initial public offering could increase its valuation to $100 billion.
Orignially published in NYT.