In what could amount to tens of thousands of vehicles, Uber just contracted with Volvo to supply it with self-driving cars. The nonexclusive contract sets the stage for Volvo to sell the ride-sharing company autonomous-based vehicles beginning in 2019 and running through 2021. The nonbinding agreement provides for the sale of as many as 24,000 Volvo XC90 SUVs equipped with driverless technology, according to Reuters.
As Uber struggles with legal issues and the loss of leadership talent in its self-driving cars technology unit, its pact with Volvo could provide a smoother path to driverless ride-sharing. According to the Reuters report, the autonomous technology in the XC90s involved will actually be provided by Uber’s Advanced Technologies Group.
“Volvo’s involvement in autonomous vehicle development may help to alleviate the trust issue that some consumers have with this technology, since Volvo is tops in perceptions of safety in our Brandwatch survey,” explained Kelly Blue Book executive analyst Rebecca Lindland. “Many younger consumers are ready to embrace autonomous vehicle features, but older consumers may need the reassurance that the Volvo brand provides to try out self-driving vehicles.”
Apparently culminating in the recently announced deal, Uber has been testing Volvo-brand self-driving cars for months. Financial details didn’t accompany the announcement, but a typical XC90 retails for roughly $50,000. This is clearly represents a major investment for Uber, but it may be a small price to pay for immediate legitimacy.
“Partnerships between companies like Uber and traditional automakers like Volvo will increase, as the future likely is the convergence of autonomous and sharing,” said Autotrader executive analyst Michelle Krebs. “This link between traditional automakers and Silicon Valley tech companies leverages the strengths of both. With the struggles Tesla is having producing the Model 3, tech companies will be smart to let automakers build the vehicles, since they have the know-how to operate in that capital-intensive, low-margin business. Vehicle makers can rely on the tech companies for the new sharing business models instead of starting them from scratch.”