Ride hailing company Uber announced on Monday that it plans to buy up to 24,000 self-driving cars from Volvo.
Volvo said in a statement that it would provide the San Francisco-based ride-sharing company with its XC90 premium SUVs complete with autonomous driving technologies, from 2019 until 2021. The framework deal is non-exclusive.
Speaking on the deal, Volvo Cars CEO Hakan Samuelsson said, “The automotive industry is being disrupted by technology and Volvo Cars chooses to be an active part of that disruption.”
The deal is said to be worth around $1.4 billion, according to the Financial Times, with the XC90 starting at $46,900 in the U.S. in terms of base model consumer pricing. Uber is already testing the XC90 in Arizona, San Francisco and Pittsburgh in trials with safety drivers on board to help refine and improve their software. Uber also paired up with Volvo to jointly develop autonomous driving and a vehicle ready for self-driving implementation, with investment from both sides committed last year.
Sarah Abboud, an Uber spokeswoman, said the Volvo prototype vehicles were not built for scale manufacturing or true autonomy — the step that removes a driver from the car completely.
She said the new agreement puts Uber on the path toward rolling out mass-produced autonomous cars at scale.
The use of autonomous cars is widely seen as critical for the future of Uber’s business. Automakers like Tesla (TSLA), Ford (F) and GM (GM) are also toying with autonomous cars and ride services.
Without the cost of having to pay a driver, self-driving taxis are expected to cost significantly less than traditional taxi and Uber rides.
Jeff Miller, Uber’s head of auto alliances, said on Monday the company was “thrilled” to expand its partnership with Volvo.
“This new agreement puts us on a path towards mass produced self-driving vehicles at scale,” Miller said in a joint statement with Volvo.
Driverless rival Waymo, Alphabet’s autonomous vehicle unit, recently announced plans to launch its own self-driving ride hailing service open to consumers soon, which might be part of the impetus behind Uber accelerating its own plans. Still, no timeline has been given from either company for when everyday users might be able to access the services in a non-testing capacity.
An Uber spokesperson confirmed the 24,000 number offers a general framework, but does not represent the actual confirmed number of cars that will be purchased.
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