Uber Technologies Inc. agreed to buy 24,000 sport utility vehicles from Volvo Cars to form a fleet of driverless autos, a signal that the company remains committed to autonomous cars under newly appointed Chief Executive Officer Dara Khosrowshahi.
The XC90s, priced from $46,900 at U.S. dealers, will be delivered from 2019 to 2021 in the first commercial purchase by a ride-hailing provider, Volvo said in a statement Monday. San Francisco-based Uber will add its own sensors and software to permit pilot-less driving.
Uber’s order steps up efforts to replace human drivers, the biggest cost in its on-demand taxi service. The autonomous fleet is small compared with the more than 2 million people who drive for Uber but reflects dedication to the company’s strategy of developing self-driving cars. Last year, Uber agreed to use 100 XC90s for self-driving tests in Pittsburgh and later struck a deal to include autonomous vehicles from Daimler AG’s Mercedes-Benz in its network at some point.
But the status of the project was unclear after Alphabet Inc.’s driverless car division Waymo sued Uber this year, claiming the ride-hailing company stole trade secrets, and the U.S. Justice Department opened an inquiry into the matter. Uber has said it didn’t use stolen information. Shortly before taking over as CEO in September, Khosrowshahi said Uber must focus on the core business, which raised questions about the costly self-driving program.
“This new agreement puts us on a path toward mass-produced, self-driving vehicles at scale,” Jeff Miller, Uber’s head of auto alliances, told Bloomberg News. “The more people working on the problem, we’ll get there faster and with better, safer, more reliable systems.”
For carmakers, news of Uber buying vehicles at a commercial level means potential new sales, but also looming disruption to a business model that sees autos largely sold to private owners. Uber’s $70 billion valuation already puts the group almost on a par with Germany’s Daimler.
The deal will boost sales at Volvo and should also help lower the cost of the Chinese-controlled group’s own fully-autonomous cars planned from 2021. Volvo engineers have been working closely with Uber to develop a base vehicle with core driverless technology that the ride-hailing company can then augment. Volvo plans to use those cars for its own future offering.
The Five Levels of Vehicle Automation
“The automotive industry is being disrupted by technology and Volvo Cars chooses to be an active part of that disruption,” Chief Executive Officer Hakan Samuelsson said. “It’s a new market that’s emerging and we’re the first to be delivering into that segment.”
Lyft Inc., the main ride-hailing alternative in the U.S., has said it’s also building driverless cars but has mainly focused on partnerships. Among those that have agreed to test autonomous vehicles on Lyft’s platform are Delphi Automotive Plc’s NuTonomy, Ford Motor Co., Jaguar Land Rover and Waymo.
Uber, which didn’t put a timeframe on when it might introduce driverless rides, said its approach means anyone in the industry can “deploy its tech.” It highlighted people using hand signals and eye contact to negotiate traffic as one of the major challenges remaining for autonomous autos.