Uber and Toyota (NYSE: TM) are discussing the creation of an autonomous van, The New York Times reported.
The companies apparently plan to counter Waymo and Fiat Chrysler’s (NYSE: FCAU) autonomous Chrysler Pacifica. The Alphabet (NASDAQ: GOOG) subsidiary and Chrysler are testing the vans in Arizona. Toyota failed to respond to Times’ questions about the project.
Uber nearly launched an autonomous taxi service in Arizona this year, The New York Times revealed. The company was seeking regulatory approval for the service earlier this year. The Times did not reveal what vehicles Uber planned to use for the service.
CEO Dara Khosrowshahi pulled the plug on the project after a self-driving Uber killed a bicyclist. Khosrowshahi was obviously afraid the bad publicity generated by the death would hurt Uber’s planned initial public offering.
Will Khosrowshahi sell the Uber Self Driving Car?
Khosrowshahi is seeking a buyer for the ATG (Advanced Technologies Group); or autonomous vehicle project, an August 19 Times article indicates.
Interestingly, Khosrowshahi wanted to keep the ATG going until the death in March. He changed his mind and top engineers at the ATG left.
The ATG has been losing $100 to $200 million a month; The Times speculated. Khosrowshahi has been cutting Uber’s losses in anticipation of the IPO.
Why Khosrowshahi will sell Uber’s Autonomous Car
Khosrowshahi will sell the ATG because it does not fit with his vision for Uber.
Khosrowshahi sees Uber as a transportation services and finance company. The self-driving car is primarily a manufacturing and software project. Uber has no manufacturing capacity, and little supporting infrastructure for software.
Khosrowshahi admitted autonomous vehicles were “is a big-time hardware manufacturing, software problem at scale,” on August 8, 2018. The remarks were apparently made to ATG employees.
Logically, his next move will be to sell the ATG. Obvious buyers include Fiat Chrysler, Ford (NYSE: F), Toyota, Apple (NASDAQ: AAPL), Alphabet (NASDAQ: GOOGL), NVIDIA (NASDAQ: NVDA), General Motors (NYSE: GM), and Tata Motors (NYSE: TTM).
Uber’s Exit will hasten the Self-Driving Car
Strangely, Uber’s exit from autonomous vehicles will hasten the self-driving car's arrival. A manufacturer will gain several years of intensive research and vast amounts of data from the ATG.
That research and data will put a company several years ahead of the competition. A company with experience building autonomous vehicles; like Fiat Chrysler; can use that data to create a self-driving car.
Uber will benefit by buying those vehicles and deploying them. A smart move for Uber will be to lease autonomous vehicles from another company, such as Hertz (NYSE: HTZ) or Avis-Budget Group (NYSE: CAR).
A self-driving Uber is inevitable, but an autonomous car developed by Uber is unlikely. Instead, Uber will concentrate on the more lucrative business of selling transportation services to the public.
This story first appeared at Car Insurance Samurai, your chronicler of automotive insanity.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.