SoftBank and other investors may buy US$1b stake in Uber's self-driving cars

[SAN FRANCISCO] Uber is in talks to sell a stake in its self-driving technologies unit to SoftBank and other investors for as much as US$1 billion, as the ride-hailing company prepares to go public, according to four people with knowledge of the matter.

The talks are still underway and may not result in an investment, said the people, who asked for anonymity because they were not authorized to speak publicly. Apart from SoftBank, the investor consortium includes an automaker, they added.

Under the terms of the proposed deal, investors would purchase from a pool of Uber stock specifically earmarked for the self-driving technologies unit. Uber would maintain majority control of the self-driving arm and would use the investment to fund its research and development. The deal would value the self-driving business at US$5 billion to US$10 billion, the people said.

Uber filed confidentially to go public in December in what would be one of the largest tech initial public offerings of recent years. The company, based in San Francisco, could hit a valuation of US$120 billion when it reaches the stock market.

But Uber is under scrutiny for its losses - its net loss was US$842 million in the fourth quarter - and self-driving technologies are expensive. A US$1 billion infusion could ease worries about how costly it is to develop autonomous cars.

The proposed investment was earlier reported by The Wall Street Journal.

Uber has for years invested heavily in self-driving cars, which it has said will eventually become a primary mode of transportation, replacing its human drivers. But its autonomous unit, formed in 2014, loses between US$100 million and US$200 million each quarter. Its fleet of vehicles was also grounded for nine months last year after one of the autonomous cars struck and killed a pedestrian in Arizona. In the past, Uber has considered spinning off the unit as a separate entity.

Uber Freight, the company's long-haul trucking business, also has a separate valuation based on pools of equity specifically earmarked for the unit. As part of an agreement with employees, the company rewarded them with equity in Uber Freight as a stand-alone business late last year.

SoftBank is already a major investor in Uber after it acquired about 17.5 per cent of the ride-hailing firm's stock last year at a significant discount. In addition to Uber, SoftBank has poured money into ride-hailing companies such as Ola in India and Grab in Southeast Asia.

SoftBank has also invested in businesses focused on autonomous vehicles. In mid-2018, the firm invested US$2.25 billion in GM Cruise Holdings, a division of General Motors. Structuring Cruise as a separate entity made it possible for General Motors to isolate the losses from its autonomous division.

In August, Toyota invested US$500 million in Uber. The move was meant to let Uber put its self-driving technology in Toyota vehicles.

"Toyota constantly reviews and considers various options for investment, but we do not have anything to announce about a further investment in Uber at this time," a Toyota spokeswoman said Wednesday.

NYTimes