Uber agrees to buy up to 24,000 autonomous Volvo cars

Uber
Uber and Volvo have entered into a deal where the Swedish automaker will provide 24,000 driverless cars to the ride-hailing service. 

Uber deal marks shift from app to operator of a fleet of cars

On Monday, Uber and Volvo announced a deal between the two companies that will see the ride-hailing service company shift to become the operator of a fleet of cars.

According to Reuters, Uber plans to buy up to thousands of self-driving cars from the Swedish automaker.  The deal would help Uber overcome setbacks at its autonomous driving division after a lawsuit was filed over trade secrets as well as the departure of the company’s top talent.

In a statement issued by Geely, Volvo’s parent company, the company will provide Uber with XC90 SUVs equipped with self-driving technology as part of the non-exclusive deal.

A representative from Volvo told Reuters the deal could include up to 24,000 vehicles.

“Our goal was from day one to make investments into a vehicle that could be manufactured at scale,” Jeff Miller, Uber’s head of automotive alliances, told Reuters.

The deal builds on a $300 million alliance Volvo and Uber announced last year.  The initial deal focussed on the design and financing of the cars with self-driving systems.

“We get support developing this car,” Volvo Cars CEO Hakan Samuelsson said in an interview with Reuters. “It’s also a big commercial deal.”

The autonomous technology to be used in the Volvos has yet to be built and is under development by Uber’s Advanced Technologies Group.

Should it go through, the deal could be the largest deal so far in the autonomous vehicle industry and give Uber its first commercial fleet of cars.

The San Francisco-based company has been testing prototype Volvo autonomous cars in Tempe, Arizona and Pittsburgh for over a year.  There have been safety drivers in the front seat ready to take over control of the vehicle if the self-driving system fails.

Once testing is complete and regulators sign off on the technology, the driverless cars would be available through the Uber app and will pick up passengers.

No financial details were disclosed by the companies, but a new Volvo XC90 has a starting price of about USD$50,000.  According to Miller, a small number of cars would be bought using equity and others would be purchased with debt financing.

Volvo says it will build the SUVs at its Torslanda plant in western Sweden.  Samuelsson told Reuters that the cars will be sold at roughly the same profit margin as Volvo sells through dealers.

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