Uber purchases 24,000 Volvos in road toward autonomous vehicle rollout

Uber Technologies Inc. agreed to buy 24,000 sport utility vehicles from Sweden’s Volvo Cars to form a fleet of driverless autos.

The XC90s, priced from US$46,900 at U.S. dealers, will be delivered from 2019 to 2021 in the first commercial purchase by a ride-hailing provider, Volvo said in a statement Monday. San Francisco-based Uber will add its own sensors and software to permit pilotless driving.

Uber’s order steps up efforts to replace human drivers, the biggest cost in its on-demand taxi service. The autonomous fleet is small compared with the more than two million people who drive for Uber but reflects a commitment to the company’s strategy of developing self-driving cars. The initiative has faced questions since Alphabet Inc.’s driverless car division Waymo sued Uber this year, claiming the ride-hailing company stole trade secrets, and since the U.S. Justice Department opened an inquiry into the matter. Uber has said it didn’t use stolen information.

Uber agreed to use 100 XC90s for self-driving tests in Pittsburgh, while also striking a deal to include autonomous vehicles from Daimler AG’s Mercedes-Benz in its network at some point. “This new agreement puts us on a path toward massproduced, self-driving vehicles at scale,” said Jeff Miller, Uber’s head of auto alliances. “The more people working on the problem, we’ll get there faster and with better, safer, more reliable systems.”

For carmakers, news of Uber buying vehicles at a commercial level means potential new sales, but also looming disruption to a business model that sees autos largely sold to private owners. Uber’s US$70 billion valuation already puts the group almost on a par with Germany’s Daimler.

The deal will boost sales at Volvo and should also help lower the cost of the Chinese-controlled group’s own fully autonomous cars planned from 2021. Volvo engineers have been working closely with Uber to develop a base vehicle with core driverless technology that the ride-hailing company can then augment.

“The automotive industry is being disrupted by technology and Volvo Cars chooses to be an active part of that disruption,” chief executive Hakan Samuelsson said.

Lyft Inc., the main ride-hailing option in the U.S., has said it’s also building driverless cars but has mainly focused on partnerships. Among those that have agreed to test autonomous vehicles on Lyft’s platform are Delphi Automotive Plc’s NuTonomy, Ford Motor Co., Jaguar Land Rover and Waymo.

Uber, which didn’t put a time frame on when it might introduce driverless rides, said its approach means anyone in the industry can “deploy its tech.”