Uber Technologies and Volvo Cars have reached an agreement this Monday, in which the automaker will supply the ridesharing company with 24,000 XC90 models between 2019 and 2021. Uber will then stock them up with their own in-house self-driving technology.
The deal is estimated to be worth around $1.4 billion by the Financial Times, and it is adding to the $300 million partnership struck back in 2016 for the first fleet of Volvo SUVs. The ball is now in Uber’s court, given that the fulfillment of that promised autonomous future now depends entirely on them.
While most industry experts would argue that the ride-hailing company has other, more urgent priorities to attend, former CEO Travis Kalanick believed in the importance of being first. With rivals like Waymo lurking and advancing progressively on the field of driverless tech, there is also urgency on staying ahead.
Volvo Cars signs agreement with @Uber to provide them with #AutonomousDriving compatible cars between 2019-2021. https://t.co/cz2MrWjXkB pic.twitter.com/HZpk237W9a
— VolvoCarGroup (@VolvoCarGroup) November 20, 2017
Uber promises a driverless future, but will it deliver?
Uber’s most recent commercial commitment is pivotal to realize one of the most ambitious goals of its long-term mission: to deploy a fleet of self-driving taxis in the U.S. by the time the new decade begins.
The challenge lies in the company’s end of the deal, given that Volvo is merely supplying base models with some autonomous features, but not the complete set of sensors and modules the car needs to achieve full self-driving capabilities. That is up to Uber, and some doubt it might be able to deliver on time.
The San Francisco-based startup has been running tests on real roads for some time now, but the amount of data it has gathered is not nearly enough to match some competitors like Waymo, which even with tens of thousands of real-life miles under its belt is being cautious with the rollout of their first fully driverless fleet.
Uber needs to define what it wants to be before it’s too late
One other conflict with Uber and Volvo’s reignited partnership is that it makes all other company projects less plausible in the long run due to the tie-up it poses to own vehicles and assets rather than rent and use them to satisfy ride demand.
Some people argue that the ongoing deal with Volvo is actually detrimental to Uber’s future development as a company and to other side projects that could be equally or more valuable. Uber Air, for example, plans to deploy flying taxis in L.A. and Dubai around the same time self-driving fleets would start to cruise the streets.
The acquisition of 24,000 new units and the development of 24,000 sensor arrays will only add to the increasing rate at which the company is bleeding cash when it actually should be seeking profitability. Being worth tens of billions is not enough if it’s all on paper and you can’t break even.