Uber, the ride hailing app staking much of its future on becoming a force in the impending autonomous vehicles sector, is reportedly courting investors interested in taking a minority stake in its driverless unit. The Wall Street Journal reports that two potential investors with whom talks are making progress are Toyota and SoftBank’s Vision Fund, the world’s biggest tech investor.
Uber’s Advanced Technologies Group is the unit focused on developing the technology system that will allow cars to navigate themselves to a destination without any input from a human drivee. It is believed to be one of the early leaders in what is expected to be a hugely lucrative market before the end of the next decade. However, it has also fallen significantly behind Alphabet’s Waymo. Google’s parent company’s driverless unit is thought to have the driverless operating system that is closest to the finished article.
As well as the actual technology, Waymo has pulled far ahead of the competition when it comes to the test miles its driverless vehicles have driven. It even has a limited commercial service already operating in Phoenix, Arizona. Data from test miles driven is not only important in terms of fine tuning driverless technology systems but is expected to be a key consideration when lawmakers and regulators start to hand out licenses for full commercial driverless taxi services.
Uber had a serious setback last year when one of its vehicles was involved in a fatal accident that saw a pedestrian lose her life. Uber’s vehicle was found to be blameless for the incident. The pedestrian was crossing at an inappropriate place and a human driver would probably have been less likely to manage to avoid the collision. However, testing was suspended indefinitely while an investigation was carried out and the incident was certainly a disaster from a PR point of view. Uber, which had already been falling behind Waymo, saw its major competitor further extend its lead.
Developing driverless car technology is an expensive R&D undertaking and establishing market share will also not come cheap. The eventual winners of the race to lead the driverless car market stand to make a lot of money but getting their will inevitably be a capital-intensive business. As such, it is perhaps no surprise that Uber has decided to look for an investment partner with deep pockets.
Figures reported have suggested the Vision Fund could take a $1 billion stake in the unit, valuing it at anywhere between $5 billion and $10 billion. Toyota refused to either confirm or deny discussions with Uber had taken place.
With a 2019 IPO expected, Uber are under investor pressure to show financial discipline. The company is thought to spend around $500 million a year on the Advanced Technologies Unit and there is little prospect of it starting to generate any meaningful revenues for a number of years. The Vision Fund already has interests in the driverless sector. It has invested $2.5 billion into General Motor’s autonomous vehicles Cruise unit and already holds a significant stake in Uber itself. For Toyota, any investment would offer increased exposure to the driverless market in the USA and Europe.