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Report: Uber is considering spinning off its self-driving car unit
Uber Technologies Inc. is considering spinning off its troubled self-driving car division ahead of its initial public offering next year, according to a report published Wednesday.
The Financial Times, quoting “two people familiar with the matter” claimed the idea is well advanced and that Uber has already received interest from potential investors who would be willing to take a stake in its “Advanced Technologies Unit.”
Under the proposal, Uber would retain operational control of the spun-off company, but the new investors would both share the costs of developing the technology as well as reap the rewards should the technology ever get commercialized.
The discussions come ahead of Uber getting close to going public in 2019. A report yesterday noted that Uber has received proposals from Wall Street banks that value the company at as much as $120 billion in an IPO.
Coming into that IPO, Uber financials have never been solid. In the first quarter, Uber reported its first-ever profit thanks to the sale of its Russian and Southeast Asian businesses before returning to form in the second quarter with an $891 million loss.
Spinning off its self-driving car division, a loss-making division that has never earned a single cent, would make Uber’s financials somewhat more appealing ahead of its IPO.
The division has not only been a financial drain for Uber. From having to pay $245 million to settle a lawsuit filed by Waymo LLC for theft of intellectual property to its vehicles running over pedestrians, Uber’s self-driving unit has been a public relations nightmare.
Although Uber has staked its future on self-driving vehicles negating the need to pay drivers to pick up passengers, theoretically making it profitable at some point, it doesn’t necessarily have to develop the technology by itself.
Uber has signed a number of partnerships that give it alternatives, such as deals with Toyota Motor Corp., General Motors Co. and Daimler AG. That last deal is the most interesting, since it has the maker of Mercedes-Benz vehicles providing self-driving cars to Uber for revenue use, partially or fully negating the need for Uber to deploy its own dubious technology.
Photo: zombieit/Flickr
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