Uber announces $1 billion investment into self-driving

uber self driving

The deal will value the ATG at $7.25 billion and form a new entity with its own board.

Uber has declared a deal for a $1 billion investment in its self-driving vehicle unit, only 2 weeks before its initial public offering.

Toyota and Japanese auto-parts provider Denso will together invest $667 million, whereas Softbank’s Vision Fund is going to invest $333 million. SoftBank is already Uber’s biggest shareholder and Toyota invested $500 million in 2018.

The investment values the division, referred as the Advanced Technologies Group (ATG), at $7.25 billion and creates a newly founded corporate entity with its own board. Representatives from the investors participated in the signing ceremony at Uber’s San Francisco headquarters Thursday morning together with Uber CEO Dara Khosrowshahi and ATG leader Eric Meyhofer.

Uber formally kicked off its IPO process earlier week with the public filing of its prospectus. The next step is a road show at the end of this month, where Uber’s executives and bankers are going to sell the ridesharing startup’s story and business model to possible public market investors.

Smaller ridesharing competitor Lyft went public at the end of March and had a hard time in public markets as investors wonder about its heavy losses and path to profitability.

Uber, while far more worldwide and diversified than Lyft, burned through about twice the amount of cash in 2018. It, similar to Lyft, is expected to price its IPO at a premium to its last private market valuation.

The new investment provides Uber fresh capital to develop technology for self-driving automobiles, that it will argue to investors is important for its long term business model.

Toyota is also dedicated to contribute up to an extra $300 million over the next three years to help cover expenses in the newly formed unit.

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