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Uber plans to use Volvo XC90 sport utility vehicles that have been modified for autonomous driving. (Credit: Uber)

Uber says it’s acquiring Otto, a venture working on self-driving trucks, and starting up an autonomous-vehicle experiment with Volvo in Pittsburgh.

The moves by the ride-share trailblazer, announced on Thursday, came just days after Ford laid out its plan to put autonomous ride-share vehicles on the road by 2021. Such moves signal that ride-sharing and ride-hailing will loom as a major frontier for automotive autonomy.

In a blog post, Uber CEO and co-founder Travis Kalanick said that Otto’s co-founder, Anthony Levandowski, would lead the company’s self-driving efforts in the San Francisco Bay area as well as Pittsburgh. “If that sounds like a big deal — well, it is,” Kalanick said.

Analysts have long noted that the biggest expenses for ride-sharing services such as Uber and Lyft are the payments to the driver — and that such drivers were likely to be among the first to feel the brunt of the economics behind autonomous vehicles.

Kalanick took issue with that view in an interview with Business Insider. He argued that there would always be “places that autonomous cars are just not going to be able to go, or conditions they’re not going to be able to handle.”


“And even though it is going to be a smaller percentage of the whole, I can imagine 50,000 to 100,000 drivers, human drivers, alongside a million-car network,” he said.

Starting this month, the Uber-Volvo experiment will put about 100 specially modified Volvo XC90 sport utility vehicles on the streets of Pittsburgh, Bloomberg News reported. Uber customers will be paired with the cars at random and ride for free. Although the vehicle is capable of driving itself, an Uber engineer will be in the driver’s seat, ready to take control. A co-pilot will take notes during each ride.

Recode reported that Volvo and Uber would contribute $300 million to the project.

The Otto acquisition involves more than 90 employees. Terms of the deal were not announced, but Bloomberg quoted an unnamed source as suggesting that the price could be about $680 million if projected targets are met.

Otto is working on kits that would allow tractor-trailer trucks to drive themselves, theoretically allowing a trucker to take naps on the road. The system is being tested under supervised conditions on highways around San Francisco, and could be adapted for Uber vehicles as well.


Before founding Otto, Levandowski worked on Google’s self-driving car project. He also led the Berkeley team that the invented the first self-driving motorcycle, Ghostrider, which was entered in the DARPA Grand Challenge races of 2004 and 2005.

Uber’s deals — and Kalanick’s comments — demonstrate that the fast-rising company doesn’t intend to be left behind by the shift toward autonomous vehicles. The deal with Volvo is said to be non-exclusive, which leaves Uber free to pair up with additional partners — including Ford. In fact, Uber already has been using autonomous Ford Fusion Hybrid vehicles for testing.

This week Ford said it would start building fully autonomous vehicles for ride-sharing and ride-hailing markets within five years, but it didn’t say who would be in charge of operating those vehicles. Uber is an obvious candidate.

Uber’s chief rival in the ride-sharing market, Lyft, has a $500 million investment deal with GM for on-demand autonomous vehicles. And Tesla, the electric-car manufacturer headed by billionaire Elon Musk, has its own master plan to move forward with increasingly autonomous vehicles as well as trucks. Google and Apple are working on autonomous vehicles as well.

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