Uber’s Self-Driving Car Plans Involve a Trucking Startup

Aug 18, 2016

Uber has big ambitions when it comes to self-driving cars, and part of its plan involves a self-driving truck technology startup.

The San Francisco ride-hailing company, which announced last year its plans to invest in self-driving tech, has agreed to acquire Otto, a young startup, it revealed to Bloomberg and later confirmed on its blog. Otto, which developed a kit that lets big-rig trucks drive themselves on highways, was founded by four former Googlers, including Anthony Levandowski, one of the original engineers on the company's self-driving team, and Lior Ron, who headed Google Maps for five years.

Uber hasn't disclosed terms of the deal, but Bloomberg pegs the price tag at roughly $680 million, assuming certain targets are met. When the deal closes, Levandowski will take the lead of Uber's self-driving car operations while also running Otto's trucking business, according to the report.

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The deal is also reminiscent of General Motors' strategy. In May, the U.S. automaker announced it was acquiring Cruise Automation, a three-year-old startup developing a kit that would turn existing cars into self-driving ones.

The company plans to take a different approach than automakers currently developing self-driving cars. Instead of mass-producing cars, Uber plans to "strike deals" with car manufacturers. Presumably, this means it will license its self-driving tech kits to them, though it's not entirely clear. Uber also plans to start a long-haul trucking in the U.S., the company told Bloomberg.

Uber has signed a deal with Volvo to spend $300 million to get a self-driving car on the road by 2021, but will begin an early pilot later this month, according to the report.

Meanwhile, rival Lyft, which has teamed up with General Motors to develop self-driving cars, recently said that it plans to roll out a pilot at GM's campus in Michigan by the end of the year. Now, it seems Uber is ahead.

The pilot will work like this: Uber customers in Pittsburgh, where Uber has anchored most of its self-driving car efforts, will hail a ride as usual, and some will randomly be paired with a self-driving car. The fleet is made up of modified Volvo XC90 sport-utility vehicles equipped with sensors that use cameras, lasers, radar, and GPS receivers. At first, these rides will be free, and a specially trained driver and co-pilot will ride along in the self-driving cars.

Uber also confirmed that ride-hailing companies' biggest asset when it comes to self-driving cars is their data. "Nobody has set up software that can reliably drive a car safely without a human," Uber CEO Travis Kalanick told Bloomberg of the 100 million miles per day Uber drivers log.

This is presumably also the value Lyft brings to its partner in self-driving cars, General Motors. While the companies haven't shared exactly how they split the duties, Lyft is likely bringing its own pool of car trip data to the table.

The report also answers any remaining questions about Uber's plans for its drivers. "The goal: to replace Uber’s more than 1 million human drivers with robot drivers—as quickly as possible," Bloomberg's Max Chafkin writes to summarize the company's plans.

"The minute it was clear to us that our friends in Mountain View were going to be getting in the ride-sharing space, we needed to make sure there is an alternative (self-driving car),” Kalanick told Bloomberg of Google's own self-driving car ambitions. "Because if there is not, we’re not going to have any business."

Fortune has contacted Uber and will update this story if we hear more.

The story has been updated with confirmation from Uber, per its official blog.

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