U.S. tech company Uber, whose core business is its taxi-hailing app that relies on gig economy drivers, has announced the sale of its Uber Elevate flying taxis business. The unit is to be acquired by Joby Aviation. It’s the second cash-burning technology R&D business to be sold off by Uber in a week, following the earlier announcement that the company’s driverless vehicles technology business has been sold for $4 billion.
Driverless tech unit Advanced Technologies Group was sold to Californian start-up Aurora, with Uber investing $400 million in the start-up for a 40% stake as part of the deal. The agreement with Joby Aviation for Uber Elevate strikes a similar tone. Uber is investing $75 million in the company, also a start-up, on top of a $50 million investment made back in January for an undisclosed stake.
Both deals take businesses burning up cash invested in the R&D of technologies that won’t realistically offer any kind of revenue stream for another unknown number of years off Uber’s balance sheet. However, with significant ownership stakes in both companies retained, through stakes in the start-ups acquiring them, Uber still has plenty of potential upside if they do successfully generate revenues in future.
The sales can be seen as a compromise to public markets demanding Uber pursue profitability sooner rather than later.
Uber Elevate was hoped to offer Uber the opportunity of, literally, vertical expansion as a business by putting taxis in the sky. The target was, and presumably still is for new owners Joby, to be running airborne commuter services across major international cities such as London, L.A. and Melbourne by the end of the decade.
Less than a year ago Uber boasted of how it would create “virtual highways in the sky” and said it expected the first flying taxis to be running routes over U.S. cities before the end of 2023. If that does turn out to be the case, the flying taxis in the air will not belong to Uber. Or, at least, not directly.
The flying taxis Uber Elevate’s team of former Nasa scientists have been working on resemble a cross between a plane and helicopter and can take off and land vertically. The vehicles hold up to four passengers and a driver and can fly up to 60 miles, landing on rooftops and carparks.
Elevate was key to Uber chief executive Dara Khosrowshahi’s goal for the company to offer a service for every form of transport, ranging from scooters and electric bikes to taxis, flying taxis, boats and freight trucks. However, the pandemic has forced Uber to refocus on making its core ride-hailing business, and food delivery unit Uber Eats, profitable.
Uber refers to the deal with Joby as an “expanded partnership”, which is expected to mean Joby flying taxis will be hailable from the Uber app, possibly exclusively, one the service is in commercial operation.