Uber acquires Otto to lead Uber’s self-driving car effort

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Uber’s first self-driving cars will start picking up passengers this month

Uber is making yet another big push in the self-driving car space. In addition to launching self-driving rides in Pittsburgh with the help of Volvo, the company is acquiring Otto and its all-star team according to a new report from Bloomberg.

Otto has been focusing on self-driving technology that could be fitted into trucks that are already on the road now. In other words, Otto didn’t want to develop its own self-driving vehicles — the startup chose to focus on some sort of self-driving kit instead. Otto makes its own lidar sensors.

This fits perfectly into Uber’s strategy as the company doesn’t want to become a car manufacturer. Instead, Uber has been looking at partnerships with existing car manufacturers, such as Volvo, in order to turn their cars into self-driving cars using Uber’s proprietary technology. So get ready for Uber’s self-driving kit.

And then, there’s Otto’s team. Anthony Levandowski is well-known in the self-driving space as he used to work for Google on Google’s self-driving car effort in its early days. Otto’s Lior Ron was head of product at Google Maps. Given that mapping is a key element of self-driving cars, Ron’s experience could help as well.

Other engineers at Otto have worked at Tesla, Apple and Google. According to Bloomberg, Uber doesn’t want to dismantle this team of 91 employees, so Levandowski will lead Uber’s self-driving project, and the existing Otto office in San Francisco will become an Uber R&D center.

Combining Otto’s technology with Uber’s massive push in mapping makes Uber stronger than ever when it comes to putting self-driving cars on the road. Uber will also be able to use its huge user base to tap into ride data and improve its mapping solution.

Uber has no choice but to build self-driving technology if it wants to remain competitive for on-demand rides. It’s clear that prices will drop drastically once Uber can get rid of the driver in the front seat. But nothing will stop other companies from creating Uber competitors based on self-driving cars. Google, BMW, Ford, Mercedes-Benz, GM and literally every car manufacturer out there are working on self-driving cars.

While the acquisition is still in its closing stage, the two companies have agreed to a pricey acquisition just a few months after Otto came out of stealth mode. According to Bloomberg and if target goals are met, the acquisition could be worth 1 percent of Uber’s valuation, representing $680 million. So it sounds like Uber handed out shares for this acquisition.

But that’s not all. If Uber wants to get into the self-driving truck business, existing Otto employees will collectively receive 20 percent of this market’s profit. What a sweet, sweet deal.

We’ve reached out to Uber and Otto and will update this post as we learn more about the acquisition.

Update: Otto has published a blog post confirming the acquisition.