SAN FRANCISCO (Reuters) – Uber’s autonomous vehicle unit is increased from $1 billion from a consortium of investors, including SoftBank Group Corp, giving the company a much needed funding boost for its pricey self-driving ambitions on the eve of the public stock offering.
FILE PHOTO: the Uber logo is displayed on a mobile phone in London, great Britain, September 14, 2018. REUTERS/Hannah Mckay/File Photo
Uber Technologies Inc said on Thursday that the investment values are Advanced Technologies Group, who is working on the development of autonomous driving technology, at $7.25 billion. SoftBank will invest $333 million of the $100 billion Vision Fund, while Toyota Motor Corp. and auto parts supplier Denso Corp. will invest a combined $667 million.
Toyota will also contribute up to an additional $300 million in the next three years to cover the costs of the construction of a commercial self-driving vehicles, Uber said.
Reuters had reported in March speaks of the investment in the ATG.
Uber CEO Dara Khosrowshahi said that the funding will help maintain Uber’s position at the forefront of” transformation of transport.
The funding can Uber to transfer the substantial costs of the development of self-driving cars on outside investors. That is likely to soothe some of Wall Street’s concerns about Uber’s expenditure for the autonomous unit, which is topped $1.07 billion since the program was started in 2016.
In the application for an initial public offering this month, Uber warned that the development of self-driving technology “is an expensive and time consuming and could not be completed” and the company remained behind certain competitors.
The self-driving business unit does not bring any meaningful revenue for Uber, which last year was a loss of $3.03 billion.
As part of the investment, the ATG becomes its own legal entity, but remains under the control of Uber. A new ATG board of directors will be formed, with six directors appointed from Uber, one of SoftBank and one of Toyota. Eric Meyhofer, currently the head of ATG, will be the title of the CEO and report to the new council.
Such large deals are unusual for companies so close to an IPO, because the acquisition of a large new investors, changes in the capital structure of the company.
Uber is preparing to launch its “roadshow” when will pitch his company to potential investors, the week of 29 April, the establishment of an early debut on the New York Stock Exchange. It is expected to be $ 10 billion to $90 billion to $100 billion valuation.
THE NATIONAL SECURITY CONCERNS
The transaction is expected to close in the third quarter. The deal, however, will almost certainly require approval of the inter-agency regulatory group with the name of the Committee on Foreign Investment in the United States (exhorting cfius).
A law enacted last year, expands that group the authority to review non-controlling interests of foreign investors in start-up companies with certain sensitive technologies, and self-driving technology is generally regarded as the defense applications.
SoftBank investment in General Motors Co. ‘ s self-driving car unit Cruise is still exhorting cfius review and is likely to be weeks for a decision, even though that investment was announced almost a year ago.
Both SoftBank and Toyota are repeat Uber investors. SoftBank took a more than 16 percent of the shares in the company after an investment of about $8 billion last year, becoming the largest shareholder. Toyota invested in Uber in 2016 and again in August with a $500 million check to work together to develop self-driving cars.
The investment comes despite the growing disillusionment with the self-driving business, which has failed to deliver on bold promises of commercial autonomous cars and Uber’s setbacks. A crash in March 2018, with an Uber self-driving SUV killed a pedestrian in Tempe, Arizona, and forced the company to shutter its biggest test of the operation and the stop of autonomous driving in the other cities.
Uber now has a small number of cars to test in Pittsburgh, during the day and in good weather, with two of the safety of drivers. They do not offer to passengers.
The Tempe crash are harmful for the entire industry, say self-driving executives, what a blow to the confidence of the public in the safety of the robot cars.
ATG chief scientist Raquel Urtasun said in an interview with Reuters this month it was “not clear” if self-driving cars will be deployed on a large scale, and for the next ten years at least there will be a mix of robot and human-controlled cars.
Reporting by Heather Somerville; Editing by Lisa Shumaker